Why has Macau casino revenue fallen flat?
Known as the Las Vegas of Asia, Macau is a hub of grandeur, glamour and gambling. The autonomous territory is hugely popular with in January 2019 alone. But, even with an increase in the number of visitors, the overall revenue generated from gambling in the city has fallen in recent ye🐈ars.
With the in 2024, it appears more people are going digital. With more pe🥂ople opting to play live roulette online, rather than in person, what does that mean for Macau’s land based casinos? What has caused this sudden drop in revenue? And what can be done about it?
Chinese New Year drop
Although the gross gaming revenue for the January and February Chinese New Year period was around 0.5% lower than the previous year, totalling around 50.31 billion MOP (Macanese Pataca). January alone saw a 5% decrease in revenue, the first year on year decline since July 2016. But is this a repeat of the 2014-2016 crash that saw revenue fall by 36%?
According to JP Morgan’s head of Asia Gaming, Lodging & Leisure, DS Kim, dropping 5% in revenue “wasn’t that ꧅bad”. He explains that January was the third consecutive month that beat expecte♓d gaming revenue. Grant Govertsen, managing director at Union Gaming, supports Kim, putting the decrease in revenue down to 2019’s early New Year.
In 2018, the holiday fell on February 16th,♋ 11 days later than it did this year. So, as Govertsen points out, January bore the brunt of the pre-holiday slowdown and February benefited from the premium player boom after the celebrations.
Public smoking ban
Another factor that could impact the number of players in Macau’s casinos is . As of January 1st 2019, all indoor areas in casinos and airports must ♋follow stricꩲt no smoking rules, with the only exception being government approved smoking lounges.
All previously approved smoking areas are now💜 discontinued, with casinos needing to apply for new smoking lounges in their premises. The lounge managers alsoܫ have to be fully compliant with the new regulations, including ordering illegal smokers to extinguish their cigarettes immediately. Failure to comply with these rules could result in a fine of MOP 200,000.
The main impact of this smoking ban is that it has been extended to incཧlude VIP areas, affecting those spending larger sums of money and therefore decreasing 🔯the overall revenue significantly.
Slower economic growth
Senior analyst at Sanford Bernstein, Vitaly Umansky, also believes that the revenue decr💎ease is partly down to slower economic growth in China. 2018 saw in almost three decades, with a number of factors impact🅠ing the economy.
A rapidly aging population, decreasing birth rate and tightening global economy are all impacting China’s economy. Of course, with a decreased economic progression, and a halt in wage growth, the disposable income of China’s population h꧋as dropped significantly.
So, with less money to spend, limited room for smoking and a shorter Chinese New Year, Macau’s casinos are feeling the pinch this year. Although, with February’s total revenue hitting MOP 25.37 billion (around 3.17 billion US Dollars), it doesn’t appear that they will be in financial difficulty any 💧time soon.
