As
we all know Casino Industry has been the fastest growing service sector in the
world. In Malaysia, Genting Highland is where the famous and largest Casino Industry was started and its called Casino de Genting. The casino organized
the first major baccarat and blackjack tournaments in 1995 with over RM500, 000
in prize money. Today, Casino de Genting is one of the
finest gaming destinations in Asia due to Monopoly market structures.
What
is Monopoly? Monopoly is a market structure of which
a single firm producing a specific goods and services to consumer. However, there are barriers to entry to prevent new entrants into the market and has
ability to price discriminate. There are five types of barriers to entry which
is Patents/Copyright, Economies of Scale, Large initial investment, Government
directive and Ownership of scare raw materials.
The long view of new Genting’s Casino
in Malaysia
There are few barriers to entry in
gambling industry in Malaysia. Genting Highland is one of the best management company in Asia which is consist of over 36,000 employees, 11,000 acres of prime resort land and more
than 175,000 acres of choice plantation land throughout Malaysia. Furthermore, Malaysia’s
one and only gaming venue, the Casino de Genting is open every day of the year
and they offer the latest electronic table games, slots machine as well as
some of the best stakes gaming tables around with classic games such as
Roulette, Pai Gow, Baccarat, Blackjack and many more. The secret of the success of Casino de Genting's is the strong management
in their leadership, financial prudence, sound investment discipline and become a
monopoly by good quality of a government directive; these barriers to entry prevent
new firms from entering the industry to compete for profit. Therefore, Genting’s Monopoly of Malaysia Casino
Industry is enjoying the profit all for themself.
Monopoly
is a price-setter (price maker). It will produce at a level at which Marginal Revenue (MR) = Marginal
Cost (MC). Therefore, the Casino de
Genting’s demand curves will downward sloping and the MR below demand
curve. This makes them to
achieve the maximum profit being the sole producer and price setter. Due to the equilibrium
condition where there are barriers to entry, it is possible for the monopolist earns
supernormal profit both in the short-run and long-run.
There are several advantages and disadvantages of
monopoly to Casino de Genting. The advantages of monopoly for Casino de Genting are the profits
can be used for investment, research and development in future plans. They also
high profits encourage risk taking. Finally, the existence of natural monopoly
may prevent duplication of resources. However, the disadvantages of monopoly to Casino de Genting are lack of
incentive to innovate because there are no competitors. Lack of competition
also may lead to higher costs.
In conclusion, the Casino de
Genting grew by leaps and bounds as result of monopoly market structures.
