According to information released by Macau’s Gaming Inspection and Coordination Bureau, March was the 22nd consecutive month when a sharp drop in revenue was noticed. The revenue generated in March did not meet market analysts’ expectations and fell even more than what they have predicted.
After the Lunar New Year holiday, Macau-based casinos registered the smallest revenue decline amid the record slump, which made market analysts’ forecasts for March a bit more optimistic. However, Macau casinos saw a 16,3% decline in gross gaming revenue as they managed to accumulate 18 billion patacas or $2.3 billion.
Macau casinos have been suffering a rapid revenue decrease since the middle of 2014 when the Beijing government started a massive anti-corruption campaign. Macau is dependent on the casino revenues, but the campaign made high rollers opt for another gambling destination, which therefore slowed down the economy of the Chinese administrative region.
Meanwhile, two new casino resorts, run by Galaxy Entertainment Group and Melco Crown Entertainment, were opened last year with the aim of luring more tourists keen on gambling. Another two are to host its first visitors later in 2016, but investors lack the confidence that Wynn Macau and Sands China resorts will boost Macau revenues given the disappointing numbers that have been reported over the last 22 months.
Statistics show that as much as $46 billion of the market value of Macau casinos has been wiped out in 2015 but luckily, most of them reported a slight progress in the first quarter. However, the financial recovery of Macau-based gambling houses might be short lived as their shares have repeatedly been expected to improve, but in long term all signs of improvement turned out to be delusive.
Nevertheless, credit analysts expect an overall drop in gaming revenue of up to 10% throughout 2016. Macau gambling industry is currently undergoing a structural shift to mass market players, so once it is not relying solely on high rollers, it should start recovering. Yet, that tendency is not to be observed before the second half of 2017.
The Lunar New Year is said to boost casino revenues during the first quarter, although it would be unrealistic to expect better revenue than what was reported during the previous quarter. Due to the lack of big events attracting tourists to Macau, the revenues in the second quarter will most probably remain soft.
