Macau Casino Revenues Down For 3rd Straight Month In August

Back in June, Macau surprised analysts when its revenues fell for the first time in five years, but the trend has continued into July and now August marking three consecutive months of decline for the Chinese gambling hub. According to Macau’s Gaming Inspection and Coordination Bureau gross gaming revenues declined by 6.1% to $3.6 billion last month, at the higher end of the 2-6% decline rate predicted by analysts.
Macau’s gambling revenues have adversely been affected by an anti-corruption probe instigated by Chinese President Xi Jinping, and as Edmund Lee from PricewaterhouseCoopers, explains:
“Everybody wants to lay low..[VIP gamblers] don’t want to draw unnecessary attention amid China’s anti-corruption campaign.”
While many of China’s high-rollers are now keeping a low profile, Macau’s 35 casinos have thus far been unable to offset their decline with an increase in the number of mass-market visitors who currently account for just one-thirds of total gaming revenue.
The smoking ban due to be introduced in October is also likely to initially curb revenues further, but analysts believe Macau’s fundamentals will remain strong as more infrastructure developments take place in the future, including high-speed train networks and the 42 kilometers long Hong Kong-Macau-Zhuhai bridge due to be completed in 2016.
Nevertheless, Macau casino stocks have taken a battering this year to September, falling between 17-28% and under performing Hong Kong’s benchmark Hang Seng Index, which has fallen by 6.2% over the same time period. As a result of August’s disappointing revenue results, many US companies with casino operations in Macau also suffered lower stock prices, including the Las Vegas Sands, Melco Crown Entertainment, MGM Resorts, and Wynn Resorts.
There could be more bad news in store for Macau casino stocks, too, as workers demanding higher pay and better working conditions have already held seven protests this year and have threatened to escalate their actions into more serious industrial measures until their demands are met.