Macau gambling industry losing the edge as gross gaming revenues fall for the period between January and October compared to the same period last year.
Gross Gaming Revenues in Macau Fall as Visitor Numbers Drop
Dwindling visitor numbers have hurt Macau’s gaming revenue after a 3.2% drop recorded in October. The drop as reported by the Gaming Inspection and Coordination Bureau comes in the wake of the Golden Week Holiday.
While the holiday provided the much-needed revenue boost in October (an 11% rise), this was lower than what was recorded in the same period last year where the rise hit 19%. However, as it appears, this fall was predicted by analysts.
This was after the previous month’s revenue slumped to P22.1bn to mark the lowest revenues collected since September 2018. A P26.4bn year-on-year dive in gross gaming revenue represented the analysts’ predictions with the first half of the year contributing the highest drop in gross gaming revenue. The most notable drops came in April and August, both recording over 8% drops.
The first 10 months of 2018 generated P251.4bn, however, by close of October this year, the total gross gaming dropped by 1.8% to stand at P246.7bn. Such drops continue to raise concern, especially knowing that Macau has been the number one gambling destination in the region.
A recent study conducted by the University of Macau came up with answers to the declining revenues. According to the study, the percentage of gamblers in Macau dropped from 51.5% in 2016 to 40.9% in 2019. In August, Macau was termed to be falling into a technical recession and this was after the gaming services exports took a 0.8% hit.
Emerging markets in the region provide the ultimate answer to the continued decline in the number of gamblers in Macau. According to Union Gaming’s study released early in the year, Vietnam, South Korea, Cambodia, and the Philippines sliced a massive $1.4bn in VIP gross gaming revenue from Macau’s market.
The tax rates on VIP GGR are also to blame for the sharp decline. For instance, rival markets such as South Korea offer 20%, the Philippines offer 15% while Vietnam offers 14% after statutory deductions that stand at 35%.
Macau Gambling Industry Still Solid
While the gambling industry in Macau may be facing a decline in revenues, it’s still a major economic boost. The Macau Financial Services Bureau (FSB) released tax revenue figures and the industry contributed $9.43 billion between January and August 2019. This translates to a 1.5% increase compared to the same period in 2018.
Further, data from the FSB shows that casinos contributed up to 89.6% (in taxes) of the entire city’s revenue sources, showing that Macau’s gambling industry remains solid. In fact, Macau expects to rake in $12.17 billion from the gambling industry in 2019. Currently, collection stands at 77.9%.
Even so, there are still some turbulent times ahead arising from various factors. Apart from, emerging markets in the region, the ongoing trade war between the US and China as well as the recent protests in Hong Kong (the JP Morgan said it wouldn’t affect Macau’s GGR) may derail the gambling industry before getting back on track.