It’s an anniversary in Macau that casino bosses aren’t in any mood to pop champagne over. Casino revenue in the world’s largest gambling hub fell for the 12th straight month in May, as China’s battle against graft and a slowing economy kept high rollers and vacationing gamblers away.
Gross gaming revenue dropped 37.1 percent to MOP20.35 billion (USD2.55 billion), according to data released by Macau’s Gaming Inspection and Coordination Bureau. That figure compares with the median estimate from seven analysts surveyed by Bloomberg of a 38.5-percent decline.
Macau casinos’ year-long losing streak has left the city’s economy vulnerable, as output tumbled 24.5 percent in the first quarter – worse than Greece and Ukraine ever did.
Casino bosses are hoping that a series of new casinos they’re opening will draw some customers back. Galaxy Entertainment Group Ltd (GEG) last week opened two new casino-
hotels, Macau’s first in three years.
With casino revenue having moved to between MOP19 billion and MOP 21 billion in past months, Grant Govertsen, an analyst at Union Gaming Group in Macau, said, “We aren’t expecting further material downsides from here.”
“However, we acknowledge that trends could still be choppy for a number of months to come, before we see any breakout to the upside.”
Casino analysts have cut their forecasts for Macau’s gambling revenue several times this year, as Chinese President Xi Jinping expands his fight against corruption and the country’s economic growth slows.
Gaming receipts are expected to widen their slump to 21 percent this year from a 2.6-percent drop in 2014, the city’s first-ever annual decline since records started in 2002. More than USD24 billion in the market value of the city’s six operators has been wiped out so far this year.
In the first five months, casino revenue has also dropped 37 percent to MOP104.3 billion.
Galaxy dropped 4.5 percent to close at HKD35.45 in Hong Kong trading. Sands China Ltd and MGM China Holdings Ltd fell more than 3.6 percent, while Wynn Macau Ltd was down 2.3 percent and Melco Crown Entertainment Ltd dropped 0.5 percent. SJM Holdings Ltd gained 0.1 percent.
Macau’s economic output plunged 24.5 percent in the first quarter, following a 17.2-percent contraction in the previous quarter as gamblers stayed away and travelers cut spending. Sales of luxury goods also suffered with sales of watches, clocks and jewelry down 31 percent, and leather goods down 28 percent.
The number of visitors to Macau dropped 3.4 percent in April. Mainland Chinese visitors, who make up two-thirds of the city’s total visitors, fell for the second month in a row, a drop of 6.4 percent year-on-year.
Galaxy’s casino openings last week marked the start of a new era, during which each of the city’s six operators is opening a property in the next two years, betting on non-gambling Las Vegas-style features to lure back customers.
Controlled by billionaire chairman Lui Che Woo, Hong Kong-based Galaxy has live street performers alongside a hawker-style street market at a project that intends to recreate New York’s Broadway theater district. It also added more luxury shops and fine dining at an expanded property.
Macau-based Govertsen said that the company complex has been notably busier than recent history would suggest, and that this could lead to an uptick in revenue for Galaxy, though not necessarily for the market.
“We continue to believe that the new Galaxy supply will be more of a share taker than a market grower, although it will take many weeks or months to determine the exact dynamics,” he wrote.
Melco Crown Entertainment Ltd., next to open a new resort later this year, will erect Asia’s tallest Ferris wheel. Sands China Ltd. follows with a property featuring a half-size replica of the Eiffel Tower. Stephanie Wong and Billy Chan, Bloomberg
Sands leads casino market share
Sands China, run by Sheldon Adelson, ended the month with a market share of slightly over 26.5 percent, almost five percentage points higher than Stanley Ho’s Sociedade de Jogos de Macau (SJM), which recorded a share of just over 21.5 percent, according to data compiled by Lusa news agency. In third place was Galaxy Entertainment Group (GEG), run by Hong Kong-magnate Lui Che Woo, who recently opened the second phase of his expanded Cotai resort, holding a share of almost 18.5 percent. Melco Crown, which is co-chaired by Lawrence Ho, recorded a market share of 14 percent, followed by Wynn Resorts, owned by American casino tycoon Steve Wynn, whose market share was recorded as 10 percent. MGM China’s market share was 9 percent.
Mass-market tourists turned off by policies
The number of visitors to Macau has fallen 3.6 percent year-on-year in the first four months of 2015. According to a Wall Street Journal report, mass-market tourists, which Macau casinos are now making more of an effort to attract, have been turned off due to a number of policies, including: limits on visas to mainland Chinese visitors; the crackdown on UnionPay debit cards used by many gamblers to access funds here; and the smoking ban.
Furthermore, prices in Macau have been soaring and a hotel room could cost USD350 per night, while gambling tables could require a USD130 minimum bet.
“They came, they saw, they left with their money in their pockets,” Ben Lee, managing partner at Macau-based consultancy IGamiX, told WSJ. Mr Lee acknowledged that although prices are declining, it could take years for people to see Macau as an affordable place.
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