Macau has long been the biggest gambling destination in the world. Unfortunately, gambling revenue here has been on a steady decline over the past few years. The number of VIP gamblers in Macau is dropping fast and there is a concern that this market may soon be overtaken by other countries in the area.
That’s obviously a big statement to make. Macau remains a major gaming hub in Asia and it wouldn’t be a surprise to see revenue figures here back to normal by the end of the year. Today, we’re going to look at why this city has struggled to generate earnings and what to expect here in the future.
There are many factors contributing to the decline in Macau’s earnings. The majority of analysts feel it’s due to the slowing economic development in Mainland China. In 2018, this country’s economy grew at its lowest rate since 1990 by just 6.6%.
The United States and China have been locked in a trade battle for the past couple of years. The impact that this is happening on the economy is evident. As a result of this economic downturn, fewer people are choosing to gamble here.
This, in turn, is affecting Macau’s revenue. For decades, Macau casinos have relied on VIP gamblers from Mainland China to boost their earnings. As China’s economy slows, more of these gamblers are choosing to simply hold onto their money.
There’s also the issue of outside competition. A number of nearby countries are seeing their casino earnings break records. A recent report even indicates that the Philippines’ casino industry is now competing with Macau and Las Vegas. Even Japan, which has been hugely anti-gambling over the years, has legalized casino gambling in a number of different cities.
Officials in Macau are still working hard to bring in VIP gamblers to their casinos. Unfortunately, a staggering amount of these players are choosing to play in other markets including the aforementioned Philippines. Junket operators are having an extremely difficult time attracting these players to Macau.
Junkets, in case you’re unaware, are businesses that attract high rollers to casinos. They offer perks such as free accommodations in exchange for a guarantee of gambling at a specific establishment. In 2018, the number of junket operators in Macau decreased by more than 8%. Many of these junkets are moving into other countries to stay afloat.
There’s never been more competition in Asia’s gambling industry. Some of the top gaming experts feel this is the biggest threat to Macau right now. Grant Govertsen, an analyst for Union Gaming Group, recently commented on the effect that casino competition is having on Macau.
“The threat is real. Clearly, there is a growing realization that Macau VIP play is bleeding to regional markets,” he said.
Govertsen claims that, oftentimes, VIP players will test out new gaming markets before ultimately returning to Macau. That’s certainly hopeful thinking.
It’s a perfect storm contributing to Macau’s record-low revenue earnings. China’s economy is slowing down, and nearby countries are beginning to embrace their casino markets. What should we expect here over the next several months?
Despite the dubious state of its economy, many of the top gaming companies in the world are still investing in Macau. According to the Las Vegas Review-Journal, Las Vegas Sands is spending more than $2 billion on new Macau casino establishments over the next two years. It’s a promising sign for this city.
It’s very possible that Macau’s revenue will continue to decrease over the next several months. Japan is still working to open its first casinos. Once these casino establishments are launched, competition in the area will increase even more.
The number of VIP gamblers in Macau may also continue to decrease. Ultimately, Macau’s casino industry will continue to flourish. Things may look bad right now, but this city still maintains the best casinos in the area. Don’t expect this market to stay down forever.
The fact that major companies continue to invest in Macau proves this. If by some chance we see major casinos here shut down their operations, officials may actually have something to worry about.
How long do you think Macau’s revenue earnings will stay down? Will new investments help to bring back VIP gamblers in Macau? Let us know in the comment section below!
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