Why has Macau casino revenue fallen flat?
Known as the Las Vegas of Asia, Macau is a hub of grandeur, glamour and gambl🙈ing. 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 years.
With the in 2024, it appears more people are going digital. With more people opting to play live roulette online, rather than in person, what doesꦇ that mean for Macau’s land based casinos? What has caused this sudden drop in revenue? And what can b⛦e 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 expected gaming revenue. Grant Govertsen, managing director at Union Gaming, supports Kim, putting the decrease in revenue dꦦown 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-holid🌱ay 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 strict no smoking rules, with th🤪e only exception being government approved smoജking lounges.
All previously approved smoking areas are now ﷽discontinued, with casinos needing to apply for new smoking lounges in their premises. The lounge managers also 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 include VIP areas, affecting those spending larger sums of money and therefore d♔ecreasing the overall revenue significantly.
Slower economic growth
Senior analyst at Sanford Bernstein, Vitaly Umansky, also believes that the revenue decrease is partly down to slower economic grꦐowth in China. 2018 saw in almost thre🧸e decades, with a number of factors impacting the economy.
A rapidly aging population, decreasing birth rate and tightening global economy are all impactin🥃g China’s economy. Of course, with a decreased economic progression, and a halt in wage growth, the disposable income of China’s population has dropped significantly.
So, with l🌄ess 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 diffi✱culty any time soon.
