Macau gross gaming revenue (GGR) fell by 5 percent year on year in January, the first decrease in monthly revenues for well over two years.

Macau

Macau’s new smoking ban, coupled with the Chinese New Year falling at the beginning of February, was always going to make January tough going for the enclave’s casinos. (Image: Chris McGrath/Getty)

The drop had been widely anticipated by analysts, many of whom feared it would be more pronounced. Macau’s casino revenue is expected to decline across the board this year, thanks to a slowing Chinese economy and the ongoing trade war between Beijing and Washington.

Bloomberg Intelligence analyst Margaret Huang said Friday that such economic uncertainties were interrupting the flow of high-stakes gamblers from the Chinese mainland, on which Macau depends. VIP gamblers were “holding on to their money more tightly,” she said.

Silver Linings

But the fact that Macau still managed to beat analysts’ projections is a positive. New regulations that prohibit smoking in casinos in all but a few designated lounges came into force on January 1 and were expected to dent casino revenues.

Meanwhile, many gamblers are saving themselves for the Chinese New Year holidays, which fall earlier this year — from February 4 to 10.

January 2018 was always going to be difficult to beat. A stellar month, revenues were up 36.4 percent on the same period a year previously. Analyst DS Kim at JP Morgan Securities (Asia Pacific) said that considering all these factors, January 2019 should be “viewed positively by the market.”

Grant Govertsen, a Union Gaming Securities Asia Ltd. Analyst, agreed.

“We are encouraged by the January results and view the market as being more robust than it gets credit for, especially given the timing of Chinese New Year this year,” Govertsen wrote in a note.

Now More Resilient

The results suggest that recreational gamblers are still coming to Macau and still spending money, despite economic headwinds on the mainland.

The gambling hub largely reinvented itself as a mass market destination during a two-year period of economic downturn from 2014 to 2016, largely driven by China’s anti-corruption crackdown, which scared off high rollers. The evidence suggests Macau’s diversification has made it more resilient.

Macau’s GGR grew 14 percent in 2018, marking the second straight year of growth since its bounce back in the summer of 2016.