Posted on: March 1, 2024, 07:53h.
Last updated on: March 1, 2024, 10:45h.
Macau casino revenue totaled MOP18.46 billion (US$2.29 billion) in February. Despite a strong Chinese New Year holiday at the region’s casinos, the only place in China where slot machines and table games are allowed, February came in short of analyst expectations.
Analysts had forecast that gross gaming revenue (GGR) would come in upwards of MOP19 billion. The six casino operators welcomed strong visitor traffic during the month. But they risked less on the gaming machines and table games.
February casino win came in a tad lighter than the consensus of MOP19 billion to MOP20 billion,” said JP Morgan Securities Asia analysts DS Kim, Mufan Shi, and Selina Li.
February’s $2.29 billion GGR represented a 79% increase on February 2023, when Macau was still emerging from pandemic impacts linked to China President Xi Jinping’s “zero-COVID” policy. February represented a 4.4% decline from January, and remained 27% below February 2019, when the region’s casino generated GGR of $3.14 billion.
Through the first two months of the year, Macau casino revenue totaled $4.7 billion. Though that’s a 73% year-over-year improvement, the casino win remains 29% below the $6.24 billion the gaming resorts won in 2019 through February.
Macau Makeover
The future of Macau’s gaming industry, which was the richest gaming market in the world before the pandemic — a title since taken over by Nevada — remains unpredictable.
The region’s casino environment underwent great change amid the coronavirus, as VIP junkets left the region for more favorable operating climates. Junkets fled after Suncity boss Alvin Chau was prosecuted and convicted of various gambling crimes. He was sentenced to 18 years in a Chinese prison for running one of the largest junkets.
As a result of far fewer high rollers being brought to the enclave to gamble in private VIP rooms, the casino giants — Sands, Galaxy, MGM, Wynn, Melco, and SJM — were forced to pivot toward the premium and mass markets. They’ve also been ordered by way of their 10-year gaming licenses issued in December 2022 to invest significantly in nongaming amenities and attractions.
The nongaming decree is a government directive to transform Macau from a casino-first destination to a tourism market appealing to a wider, more sustainable demographic. The six companies agreed to spend at least $13.5 billion on projects away from their gaming floors. The investment minimum was raised to nearly $18 billion after a trigger was initiated last year based on their collective 2023 GGR.
Economic Worries
The Chinese economy has experienced an uneven pandemic recovery.
Manufacturing remains a paramount concern, as the industry in the People’s Republic shrunk for a fifth consecutive month in February. That’s according to the Manufacturing Purchasing Managers’ Index (PMI), which China’s National Bureau of Statistics compiles.
JP Morgan’s note on Macau’s February gaming performance said demand for the casino resorts subsided after the weeklong Lunar New Year festival faster than anticipated. Bloomberg analysts raised concerns that economic headwinds could damper Macau’s gaming recovery in 2024.
“Slowing revenue growth signals ongoing caution among Chinese consumers, as economic headwinds, falling home prizes, and a stock market rout prompt many to rein in their spending,” the report detailed. “Beijing’s crackdown on high-rolling gamblers, who previously accounted for half of Macau’s gaming revenue, means casinos have had to rely more on mass-market tourists, who are more sensitive to economic troubles.”
