Macau Casino Revenue Climbs 44 Percent in 2021, But Industry Remains Unsettled

Posted on: January 1, 2022, 10:23h. 

Last updated on: January 1, 2022, 12:34h.

Macau casinos fared significantly better in 2021 than they did in 2020. But the world’s richest gambling market still has far to go to return to pre-pandemic levels. A slew of unsettled issues and regulatory matters pose considerable threats to such a rebound.

Macau casino revenue GGR
The Cotai Strip in Macau is seen from above in a file photo. While 2021 was another dark year for the planet’s largest casino market, the industry showed glimmers of hope at times that led to a year-over-year 44 percent gross gaming revenue increase. (Image: EPA)

Macau’s Gaming Inspection and Coordination Bureau — stylized DICJ in Portuguese — relayed this morning that gross gaming revenue (GGR) totaled MOP86.86 billion (US$10.82 billion) in 2021. The haul represents a 43.7 percent on 2020.

December GGR came in at $991.5 million, a 1.8 percent year-over-year improvement. 2020 and 2021 marked the Macau gaming industry’s two worst revenue years since 2006.

Macau is a Special Administrative Region of the People’s Republic of China.

Casino Shares Drop

Macau’s six licensed commercial casino operators are set to see their concessions expire in June. That, along with the COVID-19 pandemic and the recent embargo on VIP junket groups led by mainland authorities, resulted in a mass sell-off of Macau casino stocks in 2021.

Many of those concerns linger as the new year begins.

We believe uncertainty remains regarding the concession outcomes, as well as demand recovery post-COVID and the secular decline in VIP play, which shape our conservative stance,” noted Jefferies analyst David Katz.

Two of the three US-based Macau casino operators experienced deep share reductions last year. Las Vegas Sands dropped from $57.95 to a 2021 close of $37.64 — a loss of 35 percent. Wynn Resorts went from $106.90 a share to $85, a more than 20 percent decline.

Other publicly traded Macau casino stocks went the wrong way, too. Melco Resorts tumbled 43 percent and Galaxy Entertainment lost 33 percent.

MGM Resorts, which isn’t nearly as reliant on Macau, was a rare 2021 winner in the global gaming industry. Shares of the Las Vegas Strip giant that operates two integrated resorts in Macau saw its stock jump 51 percent from $29.70 to $48.88.

2022 Critical Year

The recent exodus of VIP junket groups, which for years kept Macau’s high-limit private gaming rooms bustling, has added unsettlement to the Chinese gaming industry. But one major concern — the licensing expiration — recently gained some clarity.

Macau Secretary for Economy and Finance Lei Wai Nong said in mid-December that the six licensees will likely receive new operating permits before their current concessions are set to terminate in June.

The fresh permits will be allotted under revised gaming regulations. More stringent tracking of capital from the mainland through Macau casinos is expected, and VIP junkets being a thing of the past is a good bet.

Casino reps have expressed optimism regarding Macau’s next set of regulatory conditions, despite the probable elimination of junket groups as they’ve long been known.

Macau Chief executive Ho Iat Seng opined last week that the local government expects the six casinos to gross around MOP130 billion ($US16.2 billion) in gaming revenue next year. That projection is based on COVID-19 remaining contained.

Morgan Stanley gaming analysts say that’s likely a bit ambitious. The financial services firm said in December that it expects casino win to total around $15 billion this year. 2019 GGR totaled $36.4 billion.