Casino projections revised amid economic uncertainty, dependence on Chinese tourism

Gaming analysts are adjusting their forecasts on the city’s gaming industry, factoring in both global economic uncertainties and local market conditions, as the sector’s reliance on Chinese tourism remains a key point of concern.

In a recent report, JP Morgan Securities (Asia Pacific) Ltd. projected a potential 10% sequential decline in Macau’s gross gaming revenue (GGR) by the fourth quarter of 2025, compared to the first quarter.

Despite the stability observed in first-quarter GGR, which saw a modest year-on-year increase of 0.6%, analysts DS Kim and Selina Li raised concerns over broader macroeconomic factors, particularly the ongoing U.S.-China trade war.

The dispute, while not directly impacting Macau, is expected to have second-order effects, including a potential slowdown in Guangdong’s economy, a key feeder market for Macau tourism.

Additionally, currency fluctuations, particularly the weakening of the Chinese yuan, could further impact the gaming sector.

JP Morgan’s revised projections suggest a 10-15% downside to Macau operators’ earnings, following a 25% correction in the city’s gaming stocks over the past nine months.

Despite these bearish forecasts, some analysts remain optimistic.

Citigroup, in its monthly survey of Macau’s gaming floors, reported that high-value gambling, particularly from “whales” – players who wager HKD100,000 or more – has remained robust.

The survey showed that premium mass gaming activity was surprisingly flat year-on-year, with some whales even increasing their average wagers by 2%.

Citigroup’s findings suggest that the market for premium mass gaming is still strong, indicating confidence among high-stakes players despite concerns over the impact of regulatory crackdowns and the ongoing trade dispute.

The survey also noted that concerns over the Macau police’s crackdown on unlicensed money exchanges used to fund gambling activities may have been overstated.

Players were still able to access the gaming tables without significant disruption, which challenges early fears that the intensified regulatory environment would negatively impact gambling volumes.

Citigroup observed that whales were continuing to frequent their preferred venues, unaffected by the geopolitical tensions or local policing efforts.

Locally, the government has also signaled potential adjustments to its fiscal outlook in response to the gaming sector’s performance.

Secretary for Economy and Finance, Tai Kin Ip, acknowledged that the first-quarter GGR had not met expectations, prompting discussions on possible revisions to the public budget.

Chief Executive Sam Hou Fai also indicated in his Policy Address that the city’s fiscal policy may need to be reassessed, taking into account the current GGR trajectory.