Resurgence of Gaming Revenue in Macau

After enjoying linear growth for years, casino operators in Macau had experienced a slump in the beginning months of 2019. Gaming analysts, however, predict that casinos in Macau region is famous for are all set to witness a resurgence in gaming revenue in May. Wall Street’s well-known brokerage and investment firm Sanford C. Bernstein predicted revenue growth of 2 to 4 percent while in April the gross revenue had dipped by 8.3 percent.

New bridge and holidays to help the gambling industry

Casino operators in Macau are benefitting from the mass market segment of casual gamblers which is boosting the gaming revenue. The other factors that are contributing to the resurgence include the new bridge that links Hong Kong and Macau to Zhuhai which has led to family tourists and day-trippers bee-lining to Macau and the holiday season.

The Chinese economy which is now slated to be on the mend registered a strong first quarter, with a 6.4 percent rise in the gross domestic product (GDP) and 8.5 percent growth in industrial output. Mainland China accounts for two-thirds or more of Macau’s casino visitors. While there is a decline in VIP visitors, the increasing numbers of casual gamblers are propping up the gambling markets. Analysts at U.S. based boutique advisory firm and investment bank Union Gaming, however, predict that the recovery in revenue will come in June of 2019. In its report, Union Gaming said Macau’s casinos would register single-digit growth percentage for the entire year.

Trouble in the gaming world

While Macau’s casinos had been registering a slow down for three months in a row, the lowest point was seen in April.

Economists attribute the slow down to the slump in China’s economy that was responsible for keeping the high rollers away from casinos.

Casinos in Macau are owned and operated by companies such as MGM China Holdings Ltd and Wynn Macau Ltd.Apart from the sluggish economy in China, Macau’s casinos also face challenges in other forms. New Cotai Holdings LLC, one of the shareholders of Macau based casino resort and hotel, Studio City, filed for bankruptcy protection in April with liabilities ranging between $500 million to $1 billion. Experts believe the bankruptcy filing could affect funding for the latest phase of expansion of Studio City.

Increasing competition from other countries in Asia such as the Philippines and the trade talks that are ongoing between China and the U.S. are also key factors that are pressurizing gaming economy in Macau. Gaming analysts noted that gaming revenues in Asian countries including South Korea, Singapore and Philippines registered 41 percent growth in 2018 that was much more than what Macau experienced.