Gross gaming revenue plunges to wrap up worst year since 2015

Macau gross gaming revenue slipped for the third straight month in December, rounding out the year with a 3.4% contraction in the worst annual decline since 2015.

Gross gaming revenue was 22.84 billion patacas ($2.85 billion) in December, down 13.7% from a year earlier, according to data from the Gaming Inspection and Coordination Bureau. The result was mostly in line with analyst expectations reported by the Times last month.

Accumulated gross gaming revenue stood at 292.45 billion patacas in 2019, with much of the year-on-year slowdown felt in the final quarter.

The 2019 revenue drop interrupts three prior years of consecutive growth that had seen Macau recover much of the ground lost after the 2014 gaming slump.

Full-year earnings for 2018 stood at about 84% of the 360 billion patacas brought in at the 2013 peak, compared to about 74% in 2017. Last year’s retreat puts end-year revenue at about 81%.

Last year’s retreat also puts 2019 as the slowest growing year since 2015, when gaming revenues plummeted by one-third amid an anti-corruption campaign spearheaded by Beijing.

According to Bloomberg, arrivals in December were further crimped by President Xi Jinping’s visit to the city to celebrate the 20th anniversary of Macau’s handover. This meant tighter visa policies, travel restrictions and enhanced border security.

Earlier in the year, the decline was led by falling demand in the VIP segment. In what some analysts regard as a fundamental change to the gambler demographic, the proportion of casino revenue derived from the VIP segment dropped below the 50% mark last year for the first time.

The high-roller segment languished under the weight of trade tensions brewing between China and the U.S., as well as an economic slowdown on the mainland.

The mass segment was also under pressure last year, finding support only in a steep rise in mass visitation brought to Macau by the still-new operation of the Hong Kong-Zhuhai-Macau Bridge. The effect on year-on-year comparisons wore off in the final quarter to leave November and December as two of the three poorest months of 2019.

Analysts say that growth may return to the territory as early as this year. First-quarter results may find a lift in pent-up demand from the last quarter of 2019, as well as from easier year-on-year comparisons. Looking further ahead, the year may turn out better for casino operators as new hotel supply and infrastructure improvements take effect.