Macau Casino Revenues Drops To Two-year Low In November

The second half of 2014 has seen a major downturn in the Macau casino market, with November’s results now marking 6 months of falling revenues for the world’s biggest gambling resort. According to the latest figures released by the Gaming Inspection and Coordination Bureau, Macau’s 35 casinos generated $3.04 billion in November, representing a 19.3% decline compared to the same month in 2013. That is also the lowest amount taken by the former Portuguese colony in the last two years.
After the revenue results were released, there were widespread falls in the cost of Macau’s casino shares, with Galaxy Entertainment stocks down 2.6%, Sands China Ltd down 2.1%, MGM China Holdings Ltd down 1.3%, Wynn Macau down by 1.4%, and SJM Holdings Ltd down by 1.04%. Only Melco Crown bucked the trend and noted a 0.6% rise in its share price.
Pouring further cold water on Macau’s casino market is the fact the resort’s junket operators are currently owed billions of dollars in unpaid loans by wealthy punters, and in some cases have been waiting for up to a year to receive payment. In a worrying sign of the times, many of these high-roller gamblers have been paying back the money they owe in monthly installments rather than their usual practice of repaying their full balances all at once. As a result, the business model which up until now has sustained Macau’s casino industry has had to cut back on the amount of credit it can provide, resulting in a shortfall of money flowing into the market.
This is beginning to look like a prime example of how the junket business can go wrong, and as Standard Chartered analyst Philip Tulk commented; “The business model looks near-broken.”
So far this year, Macau’s casino revenues are currently higher by a mere 0.3%, with analysts now predicting a potential 0.6% decline by the end of 2014. If that was to occur then it would be the first time Macau’s gambling revenues would have fallen since records began in 2002. Striking a more optimistic note, analysts are also predicting a return to growth in 2015, which could reach a “high single digit.”