The 8% drop in gross gaming revenue (GGR) for casinos in Macau in April is apparently no big deal. Overall, 2019 has not been kind to Macau’s gaming industry and analysts have predicted that revenue will most likely remain flat or only see single-digit improvements throughout the year. Lionel Leong Vai Tac, the city’s Secretary for Economy and Finance, isn’t worried, though.
Speaking to reporters on Wednesday, Leong believes the gaming industry in Macau remains strong and emphasized the fact that the mass gaming segment has now taken the lead in GGR for the city. He added that the market has become more sustainable, as indicated by mass gaming, and echoed the sentiments of the analysts in asserting that this year will not see huge gains for the industry.
Leong added, “Progressively, the structure [of the Macau gaming market] is changing. I think this kind of change fits [better] into our [strategy of becoming] a world centre of tourism and leisure,” and that Macau’s government “wants to see the mass market grow, instead of the whole cake depending on the VIP [segment].”
Predictions on what will come through the rest of this year vary slightly, but all analysts have forecast single-digit growth, at the most. JPMorgan (Asia Pacific) Securities Ltd. has said that VIP roll and GGR are now at the lowest level they have been in over two years, but that mass gaming will boost the market, as indicated by the 4-5% growth it has already seen. However, it stressed that recovery won’t come anytime soon with analyst DS Kim explaining, “[Junket contacts] cite multiple reasons, such as tighter capital control and rising scrutiny on underground banks, ever-rising regional competition, smoking ban on VIP areas, [and] President Xi [Jinping]’s planned visit in December, among others.”
Union Gaming’s Grant Govertsen states, “For the whole of the second quarter of 2019, we are forecasting -2 percent growth based on a mid-single digit growth story in June. As we look out through the balance of the year, we are slightly revising our full-year forecast to low single digits (from mid-single digits) with VIP, of course, being the wild card that could materially change this forecast in either direction.”