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Macau Casino Revenue Climbs 16.3 Percent in April on VIP Revival

Wed, May 3, 5:34pm by Staff Writer

Gambling revenue in Macau rose by more than 16 percent, per the latest data released on May 1 by the Chinese special administrative district’s Gaming Inspection and Coordination Bureau.

Macau, a veritable oasis of casino gambling among the desert of China’s anti-gambling laws, recorded 20.2 billion patacas (AUD$3.34 billion) in revenue during the preceding month.

The increase of 16.3 percent in April marked the ninth consecutive month of gains for Macau’s casino industry, following a prolonged slump which lasted for 26 straight losing months.

As reported by Bloomberg Markets, financial analyst Grant Govertsen of Union Gaming Group estimates that Macau’s casinos enjoyed a 25 percent spike in “VIP” revenue – or patronage from extremely wealthy individuals who play at the highest stakes.

Govertsen also told Bloomberg Markets that revenue gleaned from recreational gamblers rose by approximately 14 percent.

In Govertsen’s appraisal of Macau’s current momentum, the return of Chinese-based VIP players to Macau’s casinos – rather than competitors in Australia and elsewhere – should continue unabated:

“We have become incrementally more bullish with the sustainability of ongoing VIP trends over recent weeks.

In the short term, VIP is going to be the biggest driver.”

Since mid-2014, the Chinese government has launched aggressive action aimed at curtailing the flight of VIP gamblers to foreign venues. Amidst the so-called “corruption crackdown,” President Xi Jinping instituted several hardline policies designed to keep the Chinese gambling dollars from flowing out of the country.

In October of 2016, authorities in Macau detained 18 employees of Crown Resorts, accusing them of violating these new policies while attempting to advertise directly to Chinese VIPs.

The James Packer-backed Melco Crown Entertainment operates several casino resorts in Macau, and at the time, the company attributed 12 percent of its overall revenue to VIP players visiting from the Chinese mainland.

Since the highly publicized arrests, Crown – along with other major casino operators –experienced sharp declines in VIP patronage as Chinese high-rollers sat on the proverbial sidelines.

Crown in particular felt the brunt of China’s anti-gambling actions, with Packer quickly initiating a companywide pivot away from Macau-based operations, and even selling off millions of dollars in high-end luxury items purchased as part of the previous VIP-focused strategy.

But as the recent revenue gain trends demonstrate, those well-heeled gamblers are increasingly getting back into the game, flocking to Macau’s collection of non-Crown casinos instead.

During each of the previous two months, Macau gambling revenue grew by at least 18 percent.

In mid-April, financial analysis firm Fitch Ratings raised its full-year gross gaming revenue projections in Macau from 9 percent to 12 percent. In a note to investors, Fitch Ratings remained optimistic about the rebound continuing, while predicting slightly reduced rates of growth based on external factors:

“The forecasted (12 percent) growth rate takes into account tougher year-over-year companions in the second-half of 2017 and the possibility that increased real estate restrictions may slow economic growth.”

The renaissance in Macau has worked wonders for a trio of American casino operators, as Wynn Resorts, Las Vegas Sands, and MGM Resorts each reported earnings that exceeded expectations.

The three casino industry titans count their various Macau operations as 64 percent, 59 percent, and 20 percent of total companywide revenue, respectively.

Wynn Resorts posted a 2.4 percent improvement on the release of Macau’s revenue report, while Las Vegas Sands gained 0.7 percent, and MGM Resorts added 0.85 percent.

An earnings report from Melco Crown Entertainment is expected to be released on May 4.

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