Macau's November 2015 Casino Revenues Lowest In 5 Years

Macau’s Gaming Inspection and Coordination Bureau has released its latest monthly casino figures, and once again the results were hugely disappointing with revenues plunging by 32.2% to $2.1 billion in November, compared to the same month in 2014. Not only is last month’s revenues the lowest total since September 2010, but China’s only legal gambling resort has now suffered 18 consecutive months of gaming revenue declines.
Up to a couple of years ago, the Macau casino market had been experiencing continual growth and in 2013 generated record revenues of $45.2 billion, a 19% improvement on 2012. In June 2014, however, Macau suffered its first revenue decline in 5 years, and by the end of 2014 total revenues had fallen by 2.6%. The market has been contracting ever since, and so far this year revenues are currently lower by 35% compared to the same period of time in 2014.
With the Chinese government’s crackdown on corruption and luxury spending still in full swing, and a broader economic slowdown affecting spending, the downward trend looks set to continue unabated. The subsequent dearth of VIP players, who once were the major driving force in the market, is also badly impacting the gambling market, and as Sanford C. Bernstein gambling analyst Vitaly Umansky explains:
“It’s a paradigm shift. Everyone realizes that the V.I.P. business has gone through a structural decline, and it’s not coming back, and it’s definitely not coming back to the way it was before.”
Commenting on the issue, Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said that most U.S. investors are now looking beyond 2016 when assessing Macau’s casino shares. In the meanwhile, a multitude of new casino related projects are still planned for the future, including Studio City on the Cotai Strip, as well as completion of the Hong Kong-Macau-Zuhai bridge, which in late 2017 will connect mainland China to Macau. According to Nomura Holdings Inc analyst Richard Huang, the bridge should result in a “moderate mass gaming improvement in 2016.”