Macau Casinos Win $37.5B in 2018, Visitation Increase Cited for 14 Percent Gaming Revenue Gain
Posted on: January 2, 2019, 07:03h.
Last updated on: January 2, 2019, 07:03h.
Macau casinos won 302,846 MOP ($37.54 billion) in 2018, a 14 percent premium on 2017 and the enclave’s highest mark since 2014.
An increase in mass market visitation has been credited for the gaming rebound, as casino resorts continue to pivot away from the high roller to more of the general public. The multibillion-dollar properties that litter the region have begun offering a more diverse array of attractions and entertainment to lessen their dependency on VIP players.
The Chinese Special Administrative Region capped off the year by smashing expectations. Gross gambling revenue (GGR) totaled $3.28 billion in December, a 16.6 percent year-over-year surge. Bloomberg Intelligence analyst Margaret Huang had forecasted just a 5.7 percent GGR increase.
The 14 percent gaming revenue jump in 2018 represents a $4.6 billion bonus on 2017’s total haul.
In 2013, as Macau casinos posted a record $45 billion win, People’s Republic President Xi Jinping directed federal authorities to begin cracking down on travel junket groups that work with casinos to bring VIP high rollers from the mainland to the gaming enclave.
With Macau being a tax haven, Xi believed that some of the country’s wealthiest citizens were using the arrangement to essentially move money out from the heavily taxed communist regime. To keep rooms occupied and their gaming floors busy, resorts began catering to the mass market with new offerings and non-gaming lures.
The transition is paying off for casino operators, and the good fortune comes as concerns continue to linger regarding the ongoing US-China trade war.
The Macau Government Tourist Office (MGTO) says overall visitation was up nine percent through November, with more than 32.2 million people making their way to the enclave in the first 11 months of 2018. The recent opening on the Hong Kong to Macau bridge, a 34-mile expanse across the Pearl River Delta, is expected to further grow mass visitation in 2019.
Gambling Still King
Despite casino resorts better accommodating the general public, gambling is still the lifeline of Macau. Gaming taxes account for around 80 percent of the enclave government’s total revenue.
Much is uncertain in the years ahead regarding the gaming industry. Licenses for SJM Holdings and MGM Resorts are set to expire in 2020, and the four other operators – Sands, Wynn, Galaxy Entertainment, Melco – will see their concessions expire in 2022.
Industry analysts expect all six operators to receive new licenses, but at what cost remains uncertain. Morgan Stanley said in a recent note that Macau regulators are considering increasing the 39 percent gaming tax, or possibly imposing a one-time fee on the six companies to receive new permits.
Concerns have also been raised that the three US casino operators in Macau – Sands, Wynn, MGM – could become targets amid the trade war. Analyst Steve Vickers opined recently, “The US-owned Macau casinos are sitting on what could be called a geopolitical fault line.”
However, he added that “to date, the Chinese have been quite careful not to escalate the conflict into a direct assault on US interests.”
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