Macau’s gambling revenue drops in Jan, but worst may be over

Tuesday, 2 February 2016 00:02 - - {{hitsCtrl.values.hits}}

HONG KONG: Gambling revenues for the Chinese territory of Macau dropped 21.4% in January, ahead of a Lunar New Year week-long holiday which is expected to boost the number of visitors to the world’s largest casino hub.

Revenue in the former Portuguese colony fell for the 20th consecutive month to 18.7 billion patacas ($2.33 billion), government data showed on Monday (Feb 1), in line with analysts’ expectations of an 18-26% decline.

Macau, which relies on the casinos for revenue, has been battered by a two-year-old anti-corruption campaign and slowing growth in China’s broader economy.

Gambling revenues are hovering around five-year lows but there are signs the worst may be over.

Casinos operated by Las Vegas magnates Las Vegas magnates Steve Wynn and Las Vegas Sands Corporation’s Sheldon Adelson reported stronger-than-expected fourth quarter revenues, largely due to an increase in the more middle class, so-called mass market gamblers.

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Appealing to these gamblers has become a priority for casinos that once relied on the wealthier VIP gamers for most of their revenues - a category that has been the hardest hit by the crackdown on corruption and illicit money flows out of China.

New casino resorts set to open this year, will include features such as a miniature Eiffel Tower and large lake fronted with a gondola ride, to draw in China’s burgeoning middle class.

On Monday, Chinese gamblers milled around the huge gaming room of the Sands China Venetian casino while families shopped and ate at the resorts’ multiple restaurants and boutiques.

Analysts and executives expect the Lunar New Year holiday, which starts on Feb 7, to further boost the number of mass market gamblers to Macau from China, which accounts for up to two-thirds of overall visitors.

Billy Ng, analyst at Bank of America Merrill Lynch, forecast total revenue growth to remain flat this year, compared to 2015 when revenues dropped 34% on the year. Other analysts have forecast revenues to fall by up to 10% or rise by up to 1%.