Macau revenue drops for the first time since 2009

By Emma Rumney
Gambling revenue in Macau fell for the first time in over four years in June as the World Cup captured the attention of China's high-rolling bettors.

The slump marks the first time Macau's revenue has turned up below par since June 2009, when it fell 17%. But as Union Gaming Research Macau analysts Grant Govertsen and Felicity Chiang note, speaking to Forbes, this lead to an "unprecedented run" that tripled the region’s revenue and secured its title as the world's largest gambling hub.

Macau is the only place in China where gambling is legal. The 35 casinos clustered within this special administrative zone recorded total gross revenue of $3.4bn (27bn patacas) ̶ a 3.7% decline in comparison to June last year, according to figures released on Tuesday by Macau's Gaming Inspection and Coordination Bureau.

Analysts however had anticipated a drop of 4-6% as the World Cup diverted the hefty VIP bets relied on for around two-thirds of the region’s revenue elsewhere.

Bill Ng, an analyst at Bank of America Merill Lynch, expects revenue will rebound after June and July to 30bn patacas, 2% higher than the year before.

However the World Cup isn't the only reason bettors have been shying away from Macau. Not only is China amidst an economic slowdown but as Edmund Lee, a partner at PricewaterhouseCoopers in Hong Kong who specialises in the gambling industry, said in an interview, China's anti-corruption campaign has left VIP gamblers wanting to lay low.

Similarly, the Macau authority's crackdown on illicit transactions via Union Pay cards reinforces the restrictions on how much both high-rollers and mass-market bettors can spend in Macau.

Tighter restrictions resulted in a stagnating VIP market and a disappointing turnover in May, making investors nervous and causing share prices to plummet.

Phoebe Tse, a Hong-Kong-based analyst at Barclays, wrote in a note that with revenue falling short again this month gaming shares could again be hindered. However she added that the current valuations could also be "attractive" for longer-term investors.

For some, June's decline is in fact a signal to buy. Forbes reports that New York-traded Macau casino parent companies such as Las Vegas Sands, Wynn Resorts, MGM resorts International and Melco Crown Entertainment were again showing gains by the afternoon of 1 July.

Some view the figures as a sign that Macau's growth slump is now over, and many remain confident that in the long term Macau will remain the world's most lucrative gambling destination.


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