Macau’s Casino Industry is Set to Grow in 2018
Following three successive years of decline, Macau’s casino industry is finally looking up, with a good chance of the industry returning to its pre-2014 levels. Revenues at casinos in Macau had begun to slump following President Xi Jinping of the People’s Republic of China adding junket companies to his anti-corruption drive. This resulted in many VIP junket operators closing down, while high rollers in the city’s private casino rooms declined.
Things are Looking Up
However, the Q3 numbers were encouraging, marking the first time in three years that revenues were looking up. In October, the Macau Gaming Inspection and Coordination Bureau reported a 22.1% increase in casino earnings in the region, as compared to the same period in 2016, with casinos winning 26.6 billion patacas ($3.3 billion). October 2017 marked the 15th consecutive month of revenue growth for the industry in Macau, as well as the best monthly numbers since October 2014.
As of October 2017, the gross gambling revenue (GGR), year to date, came in at $27.4 billion, representing 19.2% growth. In addition, the 22% growth seen in the month beat Bloomberg’s forecast of growth of 14.5%. “If the industry stays on its current pace, the final number should be somewhere north of $33 billion, which would equal the city’s total in 2011,” says a November 2017 article on Casino.org.
In fact, the Macau government is the one that stands to gain from this resurgence, given that it will benefit from the tax rewards. No wonder then that this government is now predicting double-digit growth for the industry in 2018. The government had budgeted to receive gambling taxes worth about $8.94 billion prior to 2017. Now, it expects that figure to rise by over $2.5 billion, while forecasting that casino gaming revenues in the region would continue their rapid growth in 2018.
Expressing a bullish sentiment on the future revenue growth prospects, Secretary for Economy and Finance of the Macau government, Lionel Leong Vai Tac, had predicted that the 2017 GGR would hit $25 billion mark, with the expansion in GGR and concomitant increase in gaming-related tax revenue continuing in 2018. The October numbers show that the year-to-date GGR figure has already cross the $25 billion mark, coming in at $27.5 billion.
What Will Spur This Growth?
The delayed opening of MGM Cotai could be one of the factors driving GGR growth in 2018. MGM China Holdings Ltd has postponed the opening of its casino from the fourth quarter of 2017 to January 29, 2018. Add to this the renewed push to woo high stakes rollers to the region and you have a good formula for growth. It had been the high stakes players who had helped to drive up casino revenues in Macau till the government crackdown. However, this VIP segment is once again seeing a resurgence, growing 36% year-on-year in November 2017, according to Bloomberg’s data.
Despite the government focus on increasing oversight regulations on the gaming industry in Macau, the tighter regulations are unlikely to restrict growth of the VIP segment, according the Alvin Chau, Chairman and founder of Suncity Group, the largest junket operator in Macau. Suncity Group is now wooing the VIP sector with a credit card rewards programme that gives out travel packages to high rollers, such as the one to attend the Kennards Hire Rally car race in Australia, along with rewards like a limited edition Christophe Claret watch.
Source: https://www.bloomberg.com/news/articles/2017-11-23/macau-s-vip-resurgence-to-keep-revenue-rolling
Bets at casino tables are turned into points that the client can redeem for luxury items. Suncity Group says that the rewards programme has helped betting volumes grow more than 30% in 2017, with another 20% jump expected in 2018.
Another key growth driver is the upcoming license renewals for several casinos, including Wynn Resorts Ltd and Las Vegas Sands Corp. Of course, whether the license renewal entails a one-time tax payment or increase in taxes will have an impact.
The good news is that this growth trend does not end in 2018 either. A recent report by Morgan Stanley predicts that GGR would continue to rise in the region, reaching $53 billion by 2022. The report upgraded Macau’s casino industry from “In-Line” to “Attractive on positive near/medium/long-term outlook.”
Rakesh Wadhwa. Ever since, I was a school boy, I knew India was on the wrong path. Socialism was just not what we needed to get ahead. Government controlled our travel; government controlled our ability to buy and sell; and government controlled our freedom to move our money. My life has focused on the inherent rights people have. When I was in college, I never understood, what the governments meant by their "socialistic attitude". If people are free to buy, sell and move their capital themselves without any restrictions by state, then the welfare of people is inevitable & hence the countries they live in will become wealthy. The government has no right whatsoever, to point a finger at me or my business. I am not a revolutionary. I just want to light up my cigarette and not get nagged about it. I believe in non-interfering attitude to attain more. 
The Bastiat Award is a journalism award, given annually by the International Policy Network, London. Bastiat Prize entries are judged on intellectual content, the persuasiveness of the language used and the type of publication in which they appear. Rakesh Wadhwa won the 3rd prize (a cash award of $1,000 and a candlestick), in 2006.
What the readers are saying…