fireworks display going off in the city

Is Macau Going Under?

The gambling capital of the world, Macau, could be facing serious competition when Japan begin to implement their new casinos. Gambling revenues began to fall in 2016 for the city, but a tourist boom in 2017 quickly began to increase the mass gambling market in order to stabilise it once again. Revenues climbed for the sixth consecutive month in January, but this was far below the predictions for the city, meaning we could see Macau begin to peter out again very soon.

The announcement of Japan’s casinos is highly likely to see a mass casino industry beginning to develop in Asia, and with Japan having the capacity to attract the VIP gamblers away from Macau when the first casino opens (predicted to be as early as 2023), Macau could be hit badly. However, it’ll be unclear as to which casinos will be hit the hardest – Las Vegas Sands, MGM Resorts or Wynn Resorts.

Macau Growth In January

Gaming regulators in Macau placed the monthly gross revenues for January at 19.26 billion patacas. While that may seem like a lot of money, this was just a 3.1% increase from the previous period. On paper, the gain may seem like a good statistic, but with such a huge hole that the sector had fallen into, it may not be enough. In fact, the growth in January was well below the 8% seen in December, and December was well below the 14% seen in November. Of course, there were a lot of factors in January that could have made an impact – such as the Chinese New Year being celebrated at the end of January.

High Rollers

At the Sands resort, reports showed that while VIP play in Macau was up by 25%, Sands experienced a fall, and some other venues saw significant declines, including the famous Venetian, and Wynn’s Palace. China is looking to transform the district of Beijing to move the focus away from high rollers and VIP play, and focus on more of a tourist society. Fortunately, this seems to have been working in the district as reports suggest that non-gaming contributions will expand to 17pc.

Expectations

One of the biggest problems for some of the biggest resorts is that they almost rely on the income that they receive from Macau. Las Vegas Sands derives 60% of its revenue from the district, Wynn Resorts gets more than half, and MGM are looking to expect similar amounts when they open their casino. However, Macau is not currently a safe investment opportunity, and with the rivalry of Japan set to hit the district very hard, it’ll be interesting to see whether these big names will switch their priorities to what is predicted to be the second largest gambling location in the world – even if it does come with a $10 billion price tag.

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