Macau’s Casino Revenue Fell: Is the Industry Here in Trouble?
For the first time since July of 2016, Macau’s casino revenue fell in January below what it was a year ago. Some analysts are now wondering whether this a trend that will continue in the future. Fortunately, there are some explanations for the decrease in revenue here.
It’s difficult to predict how long Macau will experience the casino revenue fall. With the Asian casino industry getting more competitive every year, it may not be long before this popular gambling hub gets overtaken. Then again, maybe we’re getting ahead of ourselves.
What Caused the Casino Revenue Dip Last Month?
There’s no doubt that China’s gaming industry has been hurt by the country’s slowing economic development. The economy here is growing at its slowest rate since 1990 with just a 6.6% increase in 2018. This reduction in China’s growth has affected industries around the world, including their own gambling industry within the special administrative region of Macau.
Coinciding with the economy slowing, many analysts predicted Macau’s revenue would begin dropping this year. High rollers are simply less willing to bet big at the casinos right now.
“The revenue drop in January reflects the continuous weakness of the business from high-stake gamblers who are holding on to their money more tightly amid China’s economic uncertainties such as the trade war,” said Margaret Huang, Intelligence Analyst for Bloomberg.
Trade disputes between China and the US are also certainly impacting the industry. The burgeoning casino industry in the Philippines could also have played a small part in the casino revenue decrease.
It’s likely that Macau’s casino revenue fell due to the smoking ban set in place on January 1st, as well. China has one of the highest smoking rates in the world, and the ban on smoking inside casinos was met with strong opposition by gamblers.
Macau’s Casino Revenue Fell: Will It Continue to Drop?
As we mentioned earlier, many analysts foresaw the drop in Macau’s gambling revenue this year. Interestingly, the drop in casino revenue was less than most projections. Most predictions listed the earning decrease at 9%. Last month, the revenue only dropped 5%.
This could be a good sign for Macau-based companies. Monetarily wise, Macau brought in about $3 billion in revenue this January. The same month last year, Macau earned a little over $3.2 billion.
Companies like Wynn Macau and Galaxy Entertainment Group actually saw their share prices increased by 2% in the wake of this news.
It’s interesting to note that tourism inside Macau is at an all-time high right now. Millions of people are heading here via the new Hong Kong-Macau-Zhuhai Bridge. A large number of these tourists aren’t gambling, and the influx of visitors hasn’t made any major effect on the revenue obtained.
Gambling earnings are expected to continue falling for the rest of 2019. Exactly how much it will decrease is up for debate. If the economy begins to grow at a rate it was just a few years ago, the revenue in Macau will likely begin increasing as well.
Could Online Gambling Expansion Help Macau?
China is notorious for being extremely strict against all forms of gambling. Only Macau offers any types of legal gambling options. Unfortunately, it’s illegal to place bets online through a foreign-based company here.
As the biggest gambling hub in the world, it’s doubtful that Macau will introduce legislation to open their online gambling market. There are currently two local gambling sites here offering horse racing and sports gambling.
Macau’s casino revenue fell last month, and for that reason, they may begin offering some casino games online, yet no plans are set in place to do so.
More and more Asian countries are now looking for a piece of the casino pie. Japan recently introduced legislation to allow casinos in a few cities, and Cambodia has been investing heavily in expanding their casino industry over the past two years.
Macau is experiencing a slight decrease in casino revenue right now, yet they remain the biggest gambling market on the planet. That could change in the future. For now, there’s really nothing to worry about here.
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