Gambling revenues in Macau increase 18 pc

Spike in number of mainland visitors widens the city's lead over Las Vegas, cementing its place as the gambling capital of the world

PUBLISHED : Thursday, 02 January, 2014, 9:18pm
UPDATED : Friday, 03 January, 2014, 4:34am

Macau's gaming industry took in 360.75 billion patacas last year, up 18.6 per cent year on year, on strong demand from mainland tourists, further strengthening its position as the world's largest gaming hub by widening its lead over the Las Vegas Strip.

Macau is the only place in China where gambling in casinos is legal.

More than 17 million mainland tourists visited Macau in the first 11 months of last year, matching the figure for all of 2012. Mainland visitors account for about 60 per cent of all Macau arrivals, according to official data.

Grant Govertsen, lead analyst at Union Gaming Group, said he expected strong growth again this year, and forecast total gaming revenue growth of 14 per cent.

The forecast was based on "expected VIP growth of 10 per cent" and "mass market and slots growth of 22 per cent", he said, with improved rail connections and infrastructure, as well as the addition of the Chimelong theme park on neighbouring Hengqin Island, helping to attract more mainland tourists.

Wee Keat Lee, an analyst at DBS Vickers Hong Kong, estimated Macau gaming revenue in 2014 would go up by 15 per cent, fuelled by robust mass-market growth.

"The growth rate of the mass market will be more than 30 per cent in 2014, while that of the VIP market will be in the single digits," Lee said.

Karen Tang, from Deutsche Bank Research, is forecasting growth of 20 per cent this year, driven by 34 per cent mass market growth and 14 per cent VIP growth.

Monthly casino revenue rose 18.5 per cent year on year last month to 33.5 billion patacas, the Gaming Inspection and Co-ordination Bureau said yesterday.

From January to November, Macau's casino revenue topped 327.3 billion patacas, more than US$40 billion. By comparison, the Las Vegas Strip generated US$5.8 billion in the same period.

This year is expected to kick off strongly for Macau with an earlier Lunar New Year, starting on January 31.

"Over the past two years we've found that gaming trends during the Christmas to New Year period have been exceptionally strong," Govertsen said.

The reason was increased mainland arrivals during the holiday season, which "should spill over into January and ultimately into the Lunar New Year holiday period that begins in late January", he said.

The bright outlook for its gaming industry helped the shares of the six Hong Kong-listed casino licence holders surge at least 44 per cent last year, according to Deutsche Bank Research, while the benchmark Hang Seng Index rose just 3 per cent.

Galaxy Entertainment soared 129 per cent last year, making its founder, Hong Kong billionaire Lui Che-woo, Asia's second-richest person, behind only Li Ka-shing. He had a net worth of US$26.1 billion, according to the Bloomberg Billionaires Index.

Govertsen said that the biggest challenge facing Macau's gaming industry could be slower growth caused by the "law of large numbers", a theory that suggests high recent growth rates will eventually revert to a level closer to the long-term average.

"However, that hasn't been a problem for Macau in the past."

SJM lost 0.8 per cent to HK$25.80 in Hong Kong on the first trading day of the year yesterday, while Sands China gained 0.9 per cent to HK$63.95. Galaxy gained 1.4 per cent while the city's Hang Seng Index edged up 0.1 per cent.