HONG KONG: Casino Revenue for Macau further dropped 32.3% in the month of November to 16.4 billion patacas ($2.1 billion), representing a revenue fall for the last 18 months. Macau, which generates two-third of its Gross Domestic Product (GDP) from gaming and casino operations, has been witnessing a continuous drop in casino revenues since mid-2014, as the Chinese government is fighting against fraudulent gaming techniques, that scare off VIP gamblers.
Most of these high-end casino visitors rely on junket promoters who arrange loans for them. In the latest crackdown against anti-corruption, the government has tried to get rid of junket promoters, which eventually lowers VIP gamblers visiting casinos. Wealthier gamblers usually bring more profits for casino operators, as they play for high stakes. However, increased pressure from the government has led VIP casino revenue to decline, compared to the mass market segment.
The Gross Domestic Product (GDP) for Macau dropped 24.2% over the third quarter ending September. Macau’s economy is on a slow trend for the last five quarters, while China’s economic slowdown has further weighed down the growth perspective.
The gross gaming revenue (GGR) for WYNN MACAU (OTCMKTS:WYNMF), the largest resort of Macau, has been dropping since mid-2014 and the year-over-year (YoY) drop has been increasing , as shown in the graph below.
Chinese President Xi Jinping is demanding Macau lower its revenue dependence on gambling. As a result, casino operators such as MGM China and Sands China are focusing more on making new resorts to attract non-gaming tourists. This is the reason why major resorts are optimistic about next year, as they expect new resort openings in 2016 to bring more visitors. MGM Cotai plans to open a new resort by the fourth quarter of 2016, as does Sands China Parisian. Wynn Palace is scheduled to open a resort in June 2016.
