Macau’s status as the world’s foremost land-based gambling hub is rapidly diminishing. Financial results from March have revealed that gross gambling revenue declined by $2.7 billion [£1.83 billion], representing a decrease of 39%. Macau’s Gaming Inspection and Coordination Bureau (MGICB) revealed the decline was the second-worst ever to be recorded. Analysts had expected a marginally worse decrease of 39%.
The March decline of 39% was not quite as sharp as the 49% decrease in February, which was the worst-ever revenue performance on record. Incredibly, gross revenue has fallen for 10 months in a row in Macau. Even the Lunar New Year in February could do nothing to prevent decline. Q1 2015 revenue has been recorded at $8.12 billion [£5.48 billion].
(Read about Macau Trying to Decrease Volume of Tourist Visitors here..)
Has the Macau Casino Market Stabilised?
Hong Kong gaming analyst Shengyong Goh of BNP Paribas believes ‘that the worst dip is over’. He is now expecting the market to stabilise in the coming months. Evidence to support that forecast is the news that SJM Holdings increased by 2.8% in trading. Galaxy Entertainment, MGM China Holdings, Melco Crown Entertainment, Sands China, and Wynn Macau also benefited from increases in trading.
The current struggles of Macau have been at their worst since back in 2011. A sluggish Chinese economy has been cited as one of the chief issues. President Xi Jinping has placed restrictions that are hurting the general economic performance of luxury goods. A consequence of that has been that fewer high rollers are making their usual trips out to Macau.
Credit Suisse has surveyed junket operators to determine why Macau is suffering. In their role of bringing gamblers to Macau, junket operators have been able to reveal that fewer high rollers are making the trip. In 2014, high rollers accounted for 60% of gambling revenues. That is a colossal percentage for a market to be dependent on.
Macau has also introduced stricter rules to govern its market, which is designated as Special Administrative Region as part of China. The most notably of the changes has been the introduction of a smoking ban to prevent players from smoking by the tables.
Expectations for Macau 2015
Come the end of the year, the Macau government believes that gross gambling revenue could fall by 32% on 2014. Analysts, however, are more optimistic, forecasting that the decline from 2014 to 2015 will be just 21%. The final revenue value decided on by analysts is $34.82 billion [£23.5 billion].
Macau’s difficulties in 2015 have inspired its government to develop alternative attractions to revitalise its tourism market. An overreliance on gambling has left Macau with no fall-back markets to make up for the gambling shortfall.
Even the casinos are attempting diversify by adding new attractions. New restaurants, shops, and entertainment attractions are all being planned. Galaxy Entertainment is one casino that will be expanding into a resort. VIPs were once the lifeblood of this market, but now no longer. The sun has almost certainly set on the old Macau, but time will tell how high the new Macau can rise.