Macau Casinos Historic Slide Continues for a 24th Straight Month
For 24 straight months, gross gaming revenue (GGR) in Macau has declined when compared to the same month one year ago, according to the latest statistics provided by the city's gaming regulator, the Gaming Inspection and Coordination Bureau.
Macau casinos reported 18.39 billion Macau Patacas (MOP) ($2.3 billion) in GGR in May 2016, representing a sharp 9.6-percent decline from the MOP 20.35 billion ($2.5 billion) reported the same period a year ago.
The decline is even more steep when looking at figures on a year-to-date basis. Macau casinos recorded MOP 91.91 billion Macau Pacatas ($11.5 billion) in GGR during the first five months of 2016 or 11.9-percent less than the MOP 104.29 billion ($13.0 billion) recognized by casinos during the first five months of 2015.
The longterm declines have been blamed by industry experts primarily on a loss of some of the highly coveted VIP gamblers, largely due to China's President Xi Jinping launching an anti-graft campaign. The campaign is an increased scrutiny on gaming junkets. Plus, there have been more and more casino resorts popping up in other Asian countries attracting customers that previously visited Macau.
More recent declines are believed to be partially due to new regulations including a ban on mobile phones and restrictions on China UnionPay Co Ltd transactions which many mainland-Chinese visitors have used to access cash. Additionally, currency devaluations and the opening of Shanghai Disney Resort in mainland China are believed to have also contributed to the decline.
Signs of stability or even growth are evident from last month's results as revenue grew by 6 percent from the MOP 17.34 billion in GGR ($2.2 billion) recorded in April. Even when factoring in that there is one extra day in May when compared to April, growth on an average daily basis still grew by 2.6 percent. However, industry analysts expect June to not show month-on-month or year-on-year increases in June due to reasons listed above along with more anti-money laundering regulations introduced in early June.
Japanese financial holding company Nomura Group analysts Richard Huang, Stella Xing, Harry Curtis, and Kelvin Wong stated in a note that, "June is unlikely to see growth but instead heading for the 25th consecutive month of year-on-year GGR decline."
GGRAsia adds that the firm believes that June 2016 GGR will be anywhere from 2-7 percent less than what was reported in June 2015 and 8-12 percent less than what was reported in May 2016.
Nomura bases some of its predictions on how casinos have performed thus far, but through some caution into the wind as it needs more time to analyze the effects of regulations recently introduced.
"We need more time to gauge whether the softer performance [in early June] was due to the recent termination of phone betting and implementation of new UnionPay terminals, or simply driven by volatility in GGR," shared Nomura analysts.
The Hong Kong branch of Sanford C. Bernstein Limited also believes that declines will continue in June. The firm's analysts Vitaly Umansky, Simon Zhang, and Clifford Kurz stated in a note that, "Assuming an average daily revenue of MOP 530 million ($66.3 million) to MOP 570 million ($71.3 million) for the remainder of this month, June GGR would be MOP 15.8 billion ($2.0 million) to MOP 16.8 billion ($2.1 million), representing a year-on-year decline of 3 percent to 9 percent, versus a 10 percent year-on-year decline in May."
The firm sites money laundering regulations and what is believed to be a continued increased scrutiny on gambling junkets as the reasons for the decline to continue.
*Exchange rates provided on a spot-basis by xe.com.
**Image courtesy of The Times.