Macao gambling revenues tumble 23%

By Bloomberg (China Daily) Updated: 2014-11-05 07:33

Macao's casino revenue plunged by the most since the city started monthly records in 2005, as the Chinese mainland's crusade against corruption prompted gamblers to cut back on spending.

Total casino revenue in the world's biggest gambling hub fell 23.2 percent to 28 billion patacas ($3.5 billion) in October, dropping for the fifth straight month, according to Macao's Gaming Inspection and Coordination Bureau. This compared with the median estimate of a 21 percent decline from five analysts surveyed by Bloomberg.

"Revenue will remain very weak for the next few months, and we expect November and December also to be down quite a bit," said Aaron Fischer, a Hong Kong-based analyst at CLSA Ltd, adding the slump might not hit casinos' income as badly as most of the drop was in the VIP segment, which tends to have lower margins.

The previous record drop was in January 2009, when revenue fell 17.1 percent in the aftermath of the global credit crisis.

President Xi Jinping's two-year-long campaign on corruption has meant many high-stakes gamblers are avoiding ostentatious displays of wealth in Macao, the only place in China where casinos are legal.

The month's data also came off a high base, as October 2013 was the second-best month on record for the city, behind February this year which coincided with Chinese Lunar New Year, a popular period for gambling.

"As the scope, magnitude and length of the campaign turns out to be wider, deeper and longer than anticipated, the scrutiny and social pressure from the austerity drive could make it increasingly difficult for one to visit Macao," JPMorgan analysts wrote in an Oct 29 research report.

Wynn Resorts Ltd, the casino company founded by billionaire Steve Wynn, reported on Oct 28 that revenue climbed 9 percent at its two casinos on the Las Vegas strip, which helped offset a 5.6 percent drop in its properties owned by Wynn Macau where the company gets more than two-thirds of its sales.

"The policy of the central government in being very, very aggressive about what appears to be misconduct and corruption has put a lot of wealthy businessmen in their foxholes," Wynn said in a teleconference after the results, according to a Bloomberg transcript.

"I don't know whether it's a squall or we're in the rainy season or how long it will last, but we're still very, very bullish on Macao," the 72-year-old executive added.

A recovery is expected to come in the second half of next year, Teledifusao de Macau SA reported last month, citing Secretary for Economy and Finance Francis Tam.

Macao recorded the slowest annual growth in casino revenue in 2009 with 9.7 percent gain and it hasn't seen a yearly decline since the city started keeping annual records in 2002.