Macau Finally Ends Two-Year-Long Gaming SlumpGaming Win Grows 1.1 Percent In August Compared To Same Month Last Year |
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Macau’s casino industry has finally put an end to a 26-month-long slump in gaming revenue, according to figures released Thursday by the local government.
Casino operators in the former Portuguese colony, the only place in China where Las Vegas-style gambling is legal, had seen their gaming win fall year-over-year in every month dating back to mid-2014. Gross gaming revenue rose 1.1 percent in August to 18.8 billion patacas ($2.4 billion).
The city was close to breaking the streak in February when gaming win fell less than one percent year-over-year. February did have an extra day due to the leap year. When gaming win fell 28.4 percent year-over-year in October, it was then the first month since January 2015 when gaming revenue fell less than 30 percent. The decline was steep and sudden.
Bloomberg reported that there was the expectation that gaming win would fall roughly 1.5 percent in August, so the result was better than anticipated. Bloomberg also reported that it estimated that revenue from mass market customers (non-high rollers) rose 3.2 percent in July, while money won off of the VIPs declined 11 percent year-over-year.
At the behest of mainland China, Macau’s government has pushed operators to focus more on the recreational gambler and invest in more non-gaming amenities. The local government wants the industry to have at least nine percent of its revenue come from non-gaming offerings by 2020. In 2014, the non-gaming revenue was 6.6 percent.
High-stakes baccarat once generated 91 percent of Macau’s gambling revenue, a figure that is falling and will continue to fall thanks to government policy.
The importance of the casino industry is displayed by the fact that in 2015 roughly two thirds of the city’s economic activity was from casino gambling.
Part of the plan for the city’s future has involved putting a limit on the number of table games casinos can have. The policy drew harsh criticism from Las Vegas casino mogul Steve Wynn, but his company eventually said it was “satisfied” with the allotment when it opened its new $4.1 billion casino last month.
Beijing grew increasingly concerned about what it perceived as corruption within Macau’s junket industry, a system that was used to help high rollers get the cash they needed to gamble with because China puts restrictions on money leaving the country.
Macau had a record $45.2 billion in gaming revenue in 2013, a figure which fell to roughly $29 billion last year. Macau’s gambling market is still more than twice as large as Nevada’s.
Prior to Macau’s downturn, it was predicted in a Wall Street Journal report that in 2017 the casino gambling market would hit $77 billion.
Roughly three dozen casinos populate Macau, and more of them are in the pipeline. In addition to Wynn’s second casino, later this year the $2.7 billion Sands’ Parisian-themed casino will open. Next year, MGM will open a $3 billion casino. Two new casinos opened in Macau last year—one from Melco Crown Entertainment and one from Galaxy Entertainment Group. Collectively, $20 billion has been invested into Macau by major casino operators despite the recent downturn.
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