Macau Casino Revenue Increases 10.3% to $3.13bn in July

The Chinese territory of Macau saw its gambling revenue increase by 10.3% to US$3.13 billion in July compared to the same month last year, with that figure also marking a 12.6% improvement versus the previous month. The result strings together two full years of uninterrupted growth for the world’s biggest gambling hub, and for the first seven months of 2018 Macau’s casino market is currently higher by 17.5% compared to the same period of time in 2017.

The data was released this week by the Gaming Inspection and Coordination Bureau, and mostly fell in line with the 11% year-on-year growth rate predicted by several investment analysts. Commenting upon July’s performance, Union Gaming’s Grant Govertsen stated:

“We view this result favorably as the month faced three headwinds: 1) the calendar was unfavorable with one fewer Sunday, 2) July had the toughest comp of the year (+29.2%), and 3) while we believe it was a small impact, the more interesting second half of the World Cup played out during the first two weeks of July.”

2018 FIFA World Cup

The 2018 FIFA World Cup took place from June 14th to July 15th, and proved one of the most entertaining in living memory, with billions of people glued to their TV screens as they followed this summer’s action. Ahead of the world’s biggest sporting event, analysts had predicted a temporary hit to the casino industry’s revenues, which have since returned to normality after the competition reached its conclusion half way through July.

VIP Segment Moderate Growth

The past couple of months have also seen the high-roller VIP segment return only moderate growth, with heavy betting on the FIFA World Cup once again providing an explanation for the fall off. Furthermore, stricter Chinese credit policy, and a slowing down of economic growth as President Trump’s trade war with China continues is likely to lead to further reduced demand for VIP players to visit Macau.

Currently the VIP segment accounts for around half the overall revenues generated in Macau, but the mass market has increasingly become the focus of attention for the island’s operators as they seek to attract more families and a younger audience. The policy shift comes as Macau attempts to follow in the footsteps of Las Vegas by transforming itself into a well-rounded tourist destination in which gambling contributes an ever smaller slice of the pie.

In Las Vegas, for instance, 40% of its casino revenue last year was derived from non-gaming related products. That figure is currently just 12% for Macau, but times are changing, with non-gaming products being heavily promoted by local authorities, while Macau’s casino re-tendering process set to start a couple of years or so from now is likely to favor those companies who place a greater level of importance on providing non-gaming options. A number of new operators are also expected to enter Macau’s casino market as a result, in the process expanding the competition currently provided by the resort’s six current operators, namely SJM Holdings, MGM China Holdings, Wynn Macau, Sands China, Galaxy Entertainment Group and Melco Crown Entertainment.

August Prediction

Looking ahead, Brokerage Sanford C. Bernstein Ltd has predicted a growth rate of between 15-17% for August, while Union Gaming’s Mr Govertsen sees revenue growth coming in slightly lower at 14%, despite August having one less Saturday than the previous year. Helping to explain the double digit forecast is a favorable year-on-year comparison versus August of 2017 when two tropical cyclones, Typhoon Hato and Typhoon Pakhar, took a big bite out of Macau’s GGR.

The two severe storms occurred within a week of each other, and brought strong winds and heavy rain leading to almost a dozen deaths, as well as widespread infrastructure damage. The city’s tourism industry suffered as a result, and was disrupted for more than a week, with casinos such as Legend Palace, Broadway Macau and Mocha Inner Harbour forced to suspend their operations as they dealt with the fallout from Typhoon Hato.