Macau Casino Revenue Jumps Nearly Six Percent, Marks Second Monthly GGR Gain

Posted on: July 1, 2019, 11:03h. 

Last updated on: July 1, 2019, 11:03h.

Macau casinos reported gross gaming revenue (GGR) of MOP 23.81 billion (US$2.96 billion) in June, a 5.9 percent gain on the same month in 2018.

Macau casino revenue GGR
Macau casinos enjoyed a prosperous June. (Image: Kosublog)

June marked Macau’s second consecutive monthly GGR increase, and exceeded expectations among gaming analysts. Financial firms Sanford C. Bernstein and JP Morgan both said the month outpaced revenue forecasts, and cited better than expected VIP play as the reason for the strong performance.

VIP demand finally seems to be stabilizing as major junkets’ rolling volumes stayed flattish month-on-month despite weak seasonality, and year-on-year declines have narrowed sharply,” JP Morgan analyst DS Kim said in a note.

January through June Macau casino win is at more than $18.5 billion, which is a 0.5 percent decline compared to 2018.

War Games

Macau is undergoing a renaissance of sorts, as officials in the Chinese Special Administrative Region look to lessen the economy’s dependency on gambling and pivot to a more diverse destination for travelers. In its annual review, the International Monetary Fund (IMF) recommended the enclave embrace incentives that encourage the six licensed casino operators to invest in non-gaming projects.

The adjacent Hengqin Island is being targeted for development. Roughly three times the size of Macau, the casinos are interested in building hotels and MICE (meetings, incentives, conventions, and exhibitions) space on the island.

However, the recent trade war between the United States and the People’s Republic has threatened the region. Though Bernstein analysts said this week there’s little chance Macau would revoke the US-based Macau licensees – Las Vegas Sands, MGM Resorts, and Wynn Resorts – the trade tensions cast a great deal of uncertainty over the region.

But, the casinos seemed to adequately mitigate the economic conditions.

Bloomberg’s Jinshan Hong writes, “An acceleration of growth shows that Macau casinos are weathering the headwinds of the tit-for-tat trade war and a slowing Chinese economy, which have chased away some of the well-heeled gamblers and ended more than two years of uninterrupted revenue growth.”

Citigroup analyst Anil Daswani is forecasting a subdued one percent year-over-year gross gaming revenue growth for Macau in 2019. If that’s realized, Macau casinos would win roughly $38.23 billion. The all-time high came in 2013 when the six licensees won $45 billion.

President Donald Trump and China’s Xi Jinping announced a truce Monday regarding their trade war. However, CNN reports that the “truce does little to alleviate pressure on a global economy wounded by earlier exchanges of fire that hit manufacturing and trade.”

Casino Stocks

Gaming industry stocks enjoyed a prosperous June, with the Bloomberg Intelligence index of Macau casino operators up 7.5 percent in June. The bounce back followed a 20 percent decline in May.

Sands, Wynn, and MGM are all trading higher today on the Macau June revenue report. Sands is up 4.5 percent, Wynn six percent, and MGM one percent.

The Vaneck Vectors Gaming ETF (exchange-traded fund), which includes 44 holdings – the five largest being Sands, Aristocrat Leisure, Galaxy Entertainment, MGM, and Wynn – is up more than 11 percent over the past month.