Macau Casinos Suffers Eight Months Of Decline In January

Macau Casinos Suffers Eight Months Of Decline In JanuaryMacau’s gambling industry has continued its unprecedented decline, and in January the island’s 35 casinos generated $2.97 billion in revenues, representing eight consecutive months of declines for China’s only gambling resort. The only piece of good news was that the 17.4% contraction in the market over January 2014 was well below the record breaking decline reported for the previous month of 30.4%. Commenting on January’s results, analyst Grant Govertsen from Union Gaming Group, said:
“This was inline with our expectations of an essentially flat month on a sequential basis. Most importantly, and supporting our recent upgrade thesis that we’ve reached a much-needed point of stabilization in the market.”
Macau’s casino industry started contracting in June 2014 after China’s President Xi Jinping began his anti-corruption and anti-money laundering drive in an attempt to clampdown on those junket operators with connections to the Triads. As a result, for the whole of 2014 Macau’s casino revenues were down by 2.6% to US$43.94 billion, representing the first time such a contraction in growth has been noted since gambling was liberalized in Macau back in 2001. Frightening China’s high-rolling VIPs away from visiting Macau has also had a drastic effect on the casino operators’ stocks, which have lost a combined $58 billion in market value over the past six months.
Nevertheless, Macau is currently undergoing a period of change as the Beijing government forces the resort to diversify away from just gambling venues, to also include culture, sports and retail. Consequently, new casino resorts applying for a license must now prove their non-gaming credentials first.
Looking ahead, analysts are already forecasting further decline in February, despite the month including the usually lucrative Chinese New Year holiday. As analyst Cameron McKnight from Wells Fargo Securities, explains:
“As always, Chinese New Year should be a significant catalyst, and our checks suggest bookings are lower than prior years.”

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