Macau Casino Revenues Shrink 34% to $29Bn in 2015

In December 2015, Macau’s casino market generated roughly $2.3 billion in revenues, representing a 21.2% fall compared to the same month last year. Back in June 2014, the island resort reported its first monthly revenue decline in over five years, but since then the rout has continued unabated, with Macau’s December results now extending its losing streak to 19 straight months.
Macau’s declining fortunes can be tied directly to the Chinese government’s ongoing campaign to crack down on crime and money laundering, which ultimately lead in 2014 to China’s only legal gambling destination experiencing a 2.6% fall in revenues to $44 billion. That contraction in growth, however, now pales in comparison to the sharp 34.3% drop in revenues to $28.93 billion reported for the whole of 2015.
Up until China’s anti-corruption drive, VIP gamblers would flood into Macau and spend millions playing their favorite gambling games, with a particular leaning towards baccarat. Their actions would subsequently contribute around half of the revenues generated by Macau’s casinos, but over the past nine months their contribution has shrunk by a huge 41%. According to Bloomberg analysts, that figure is expected to reduce by a further 13% in 2016.
Consequently, shares in Macau’s six casino operators were battered in 2015, with their share price range falling by between 31% and 56%, compared to an average drop of 7.2% reported for the Hang Seng Index. This has resulted in Galaxy Entertainment, Melco Crown, MGM China, Sands China, SJM Holdings and Wynn Macau seeing a collective $45 billion wiped from their market value in 2015.
“Macau has seen much greater pain in 2015 than everyone expected at the beginning of the year,” explained CLSA gaming research head Aaron Fischer.
Looking ahead, gaming analyst envisage a slow down in the rate of decline throughout 2016, and have forecast that Macau’s casino revenues may see a slight 5% drop in business throughout the year, with more optimistic predictions stating that a 10% rise may be possible.

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