From a professor to a PhD: Dr. Ambrose So, chief executive of SJM, says he has no problem with the Finance Secretary’s comments last week about the 5,500 table cap and the 3-5% additional limit after 2013. Brushing off whether this would have a dramatic effect on development of the Cotai projects, the Macau Daily Times quoted So as saying that as the table utilization rate had halved in Macau since the beginning of liberalization, the cap should have the effect of raising those utilization rates rather than slowing development. Speaking to Radio Macau, So said he believed the six concessionaires should be able to “better allocate the gaming tables”.

One of the things we like most about Ambrose So is his apparent grasp of irony, which is rare among Chinese managers. It’s kind of easy for the concessionaire who has nearly half of the 4,800 tables currently in operation to tells his peers to make do with what they have. Yet his logic is flawless. Divide visitors by number of tables and anyone can see how utilization rates have plummeted over the past five years. Given the central government’s stern warnings of late over the gaming industry’s development, especially the Premier’s plea to see more balanced development, the message is clear: more resorts does not mean more gaming tables. Any operator, or Wall Street investor, who has built their financial models based on past performance of casino operations and has assumed that additional table capacity equals incremental revenue, had best go back to the drawing board. Stay tuned.

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