Macau’s gaming revenue continues its free fall at 9.8 percent in May, much lower than the analysts’ estimates.
Gross gaming receipts plummets to MOP 18.4 billion ($2.3 billion), completing a two-year decline. Analysts predicted that the drop in Macau’s gaming revenue for this month is at 8 percent.
The latest figures released by Macau’s Gaming Inspection and Coordination Bureau reflects Macau’s ailing economy as a result of China’s corruption drive, which caused high-stakes gamblers to avoid the world’s largest gaming hub.
HongKong-based analysts noted that casino operators are now looking for new areas of growth outside Macau as the city state implements a stricter policy on the industry. Wynn Macau Ltd. and Sands China had already responded to the new police by focusing on tourists and recreational gamblers.
The imposition of a ban on phone betting – which is a form of proxy betting favored by some high-stakes gamblers from China – in early May also contributed to a lower gaming revenue for the month, according to analysts.
“[The steeper decline in May was] partly due to the tightening policies on the industry, especially the recent ban on phone betting,” Daiwa Capital Markets Hong Kong analyst Jamie Soo told Bloomberg.
Following the announcement from the city’s casino regulators, Macau gaming stocks extended its losses, dropping 2.4 percent at the midday break trading on Wednesday. The losers were led by Sands China, which fell 3.3 percent while Galaxy also found itself in the red at 2.5 percent.
Macau recently announced its plan to rebrand as a world-class, tourist destination that will compete with other popular city destinations around the world such as Paris, Singapore, London, and HongKong in a bid to diversify its economy.
Credit debt watcher Moody’s Investor Service warned that the government’s plan to broaden Macau’s gaming and tourism market makes its economic growth “volatile and susceptible to shifts in external demand.”
“The government has expressed plans to diversify the economic base. But these are at an early stage of development, centering primarily around the execution of existing infrastructure efforts and on vertical diversification within the tourism sector itself,” Moody’s pointed out. “Lacking a track record of implementing such reform, there is a risk that these measures will not stem the deceleration in growth in the near-term nor diversify the economy over the medium-term.”