Macau Sees 14 Percent Rise in Casino Revenue in 2018

Casino gaming revenue in Macau rose 14 percent in 2018, which marks the second consecutive year of gain as demand to for gambling services in the Chinese territory continued its rebound trend following a prolonged slump. On the same note, December 2018 also marked the 29th straight month in which the territory saw a rise in gambling revenue when compared to the same month in the previous year. This is expected since the region is China’s only legal gambling hub and there has always a growing demand by gamblers.

According to data released by the Gaming Inspection and Coordination Bureau, revenue rose 16.6 percent to 26.47 billion patacas which is equivalent of S$4.49 billion – a bit of contrast from the 10 to 15 percent rise that was estimated by analysts who were polled by Reuters. Revenue for the whole of 2018 clocked in at 302.85 billion patacas. Fortunately, the territories gambling revenues have stabilized since the period of decline that was witnessed when the central government went after public officials who were involved in conspicuous spending at the gaming venues in the gambling hub.

What to Expect

One of the things that several analysts have weighed in on is the China-US trade war as well as the slowing Chinese economy which are likely to affect the high-roller VIP segment and thus keeping further revenue gains in check. Furthermore, licenses in the gambling hub will begin to expire next years and this will force the operators to pitch for a spot on the casino floor. Fortunately, home-grown or local brands will have a bit of better luck in 2020 thanks to the frayed relations that have dealt weaker hands to behemoth American casino brands such as Wynn Macau, Sands China, and MGM China. This will be a great opportunity for the hub’s government to push for change. Ideally, the officials could push to diversify the hub which is predominantly occupied by American hands and, hopefully, even add a seventh operator.

According to JPMorgan, as it stands, 60 percent of the earnings before interest, taxes, depreciation, and amortization (EBITDA) are controlled by three United States-owned brands with Melco, Galaxy Entertainment and SJM Holdings accounting for the remaining 40 percent.

Despite the nearing of the dates of expiry of their licenses, the hub’s casinos are bulling on the potential benefits from the opening of the longest sea-crossing bridge and tunnel linking Macau to Hong Kong and Pearl River Delta in mainland China. The bridge is expected to boosts the development of Macau’s convention and exhibition business and increased visitation numbers, both of which will go a long way in boosting non-gaming revenue in the region which is largely considered to gambling-dependent.

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