Macau casinos won’t recover from their current gaming revenue swoon this year as a perfect storm of negative factors weighs down the world’s top gambling hub. Macau casinos will report their September revenue tally this Wednesday and all signs point to the fourth straight month of negative growth. The only real item being debated is the scale of September’s decline.
Deutsche Bank says the VIP gaming market – which fell 17% in August – is currently hovering between 25-30% below September 2013. Mass market gaming growth was around 15% in July and August but is expected to slow to between 8-10% in September and may well be completely flat in October. Deutsche Bank revised its overall revenue estimates for Macau’s fourth quarter, forecasting year-on-year declines of 18% in October, 12% in November and 15% in December.
Sterne Agee expects September’s revenue to be down 16% year-on-year, with VIP gaming down 21% and mass market rising just 7%. Morgan Stanley advised its clients to pull their money out of Macau and invest in Singapore, where growth has slowed but business appears infinitely more stable.
A report this week by Wells Fargo laid out the speed bumps Macau must navigate over the coming months. In addition to visa restrictions, a tightening of available credit and the ongoing reluctance of China’s high-rollers to be seen enjoying themselves too much, Oct. 6 will see the imposition of Macau’s new smoking laws, the effect of which remains hard to predict. In December, China’s President Xi Jinping is scheduled to visit Macau, which will give high-rollers extra incentive to give the region a wide berth.
Worse, Macau is bracing for a pair of high-profile investigative journalism probes into the role junket operators have played in Macau’s meteoric rise to prominence. Both the New York Times and PBS’ acclaimed Frontline documentary series are set to turn their investigative spotlight on Macau before the end of this month. Given the brouhaha kicked up by this summer’s Reuters reports on the illegal use of UnionPay mobile swiping devices on Macau casino floors, local officials and casino operators are bracing for the fallout from this TV/print tag-team.
Thankfully, Wynn Resorts boss Steve Wynn paid a visit to Macau this week and his indefatigable optimism made the trip with him. Wynn said he wasn’t concerned by what he called the “adjustment” in Macau’s revenue trajectory, saying the answer was to “adjust your business. You take tables away from VIP and put them into mass or premium mass.” Other than that, Wynn said he had no plans to go Chicken Little and make sweeping changes to his Macau business. “I don’t care about the short-term. I don’t make any decision based on the short-term. I care about the long-term.”
