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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Macau gaming revenues fall a record 49 percent in February

9 March 2015

Macau casinos suffered their worst single month gaming revenue decline on record in February, marking the region’s ninth straight monthly dip.

The Macau Gaming and Inspection Bureau said Monday night — Tuesday in China — that casinos collected $2.44 billion from gamblers during the month, a drop of 49 percent. A year ago, Macau casinos collected a single-month industry high of $4.8 billion.

Both months included the popular Chinese New Year Holiday.

The February decline comes despite a record high of more than 800,000 tourists flooded coming to Macau for the first seven days of the Year of the Goat.

Macau has experienced double-digit decreases in each of the past six months. In December, gaming revenue fell 30.4 percent to $2.9 billion, which had been Macau’s largest-ever single month decline.

“This would seem to be at the high end of the most recent consensus expectations and represented a volatile month that stepped outside of historical trends, which is a likely theme for 2015,” said Union Gaming Group principal Grant Govertsen.

Macau’s casino industry has suffered since June. A crackdown on corruption by the Chinese government has focused on junket operators who bring high-end baccarat gamblers to the casino’s ultraexclusive private gambling rooms. Several operators have been linked to Chinese organized crime triads.

In 2014, Macau collected $44.1 billion from gamblers, a decline of 2.6 percent over 2013’s record $45.2 billion. The year marked the first time revenue fell on a year-over-year basis since American companies began operating in the Chinese Special Administrative Region in 2003.

Still, Macau far outranks both Nevada and Singapore as the would’s largest gaming revenue-producing market.

The Beijing government of President Xi Jinping wants Macau to diversify its economy beyond gambling. New casinos are required to increase their nongaming amenities, such as retail, dining and entertainment.

MGM Resorts International, Las Vegas Sands Corp. and Wynn Resorts, Limited all operate casinos in Macau and are expanding their holdings.

Las Vegas Sands and Wynn Resorts rely on Macau for the vast majority of their quarterly earnings. Both companies, as well as MGM Resorts, spun off their Macau holdings into separate publicly traded companies on the Hong Kong Stock Exchange.

The three Nevada gaming companies are moving forward with new developments on Macau’s Cotai Strip region: Las Vegas Sands’ $2.7 billion Parisian, Wynn’s $4 billion Wynn Palace and the $2.9 billion MGM Cotai.

Other Macau casino operators have Cotai projects under development, including Hong Kong-based Galaxy Entertainment Group’s expansion of the Galaxy Macau resort and Melco’s Macau Studio City complex.

Macau is the only place in China where casino gambling is legal. China ended billionaire Stanley Ho’s casino monopoly in 2001.
Macau gaming revenues fall a record 49 percent in February is republished from Online.CasinoCity.com.