Macau Casino Revenues Back in Decline after Mini Revival
After two solid years of growth, the world-renowned casino business in the Chinese Special Administrative Region of Macau last year slipped back into the kind of decline last seen in 2014.
The Gaming Inspection and Coordination Bureau, which reports on casino activity in the popular tourist peninsula, reported Macau casinos collectively made $36.45 billion in 2019.
That may sound impressive, but in fact, these numbers are down 3.4% on the 2018 yearly figure.
Protests & Trade Wars
This December was one of the worst months for the industry in Macau in many years. Revenues fell by 13.7% compared to the same period last year, although there were a few extenuating factors in play that may not make for an accurate representation of the entire market’s future.
Chief of these has been political unrest and uncertainty. Whether that’s over the US-China Trade War, ongoing violent protests in the key regional transit city of Hong Kong, or continuing workers’ strikes closer to home—all of this has made many international and Chinese tourists more wary of visiting the area.
This December also saw the Chinese Premier Xi Jinping visit the region to celebrate its 50th anniversary of independence from Portugal. Such a visit meant visa restrictions and beefed up security all around the city, and many potential gambling visitors may have found that the extra preparations were not worth the hassle.
Boom & Bust
However, the overall trajectory for Macau’s 35 casinos and twelve operators looks fairly rosy. Back in 2014, when we last saw revenue declines on this scale, the mainland Chinese government was pushing forward with massive anti-corruption reforms—and Macau’s casinos were a big red target.
However, such pressures have eased off slightly in recent years. For example, only last year, the government raised the maximum limit it had imposed on cash transfers from Macau to the mainland.
The other global factors may also recede, as the US trade war looks set to cool down slightly with new meetings between Jinping’s and Trump’s regimes bringing renewed investor confidence. Rumors suggest the two superpowers may sign a deal as soon as January, which means an end to years of uncertainty and friction may be in sight.
For example, just last week, the two American firms operating casinos in Macau gained 12% in month-on-month value. However, we should expect to see a fall in the coming days as the currently closed markets react to this yearly decline reported by The Gaming Inspection Bureau.
Baccarat Bust?
Any positive projections are likely to be welcome news for the region, which heavily relies on the casino industry for its local government income. In fact, around 85% of taxes collected in Macau over 2019 came from gambling sources.
Over 75% of casino visitors in Macau are Chinese, and games like high-stakes Baccarat have long been a mainstay on casino floors here. However, casinos are increasingly aware of the wider market for lower-stakes players.
The Chinese administrations previously mentioned that the anti-corruption drive of a few years ago soured the reputation of high-stakes games for many citizens, and VIP baccarat revenues haven’t recovered since then.
However, experts predict that if the whole Chinese economy continues to grow, Macau’s casinos will be in a good place to get back on track with the resurgent revenue levels seen in 2017 and 2018.
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