Macau gaming revenue surges the most in four years in January
Casino turnover is up 36 per cent from a year ago as the gambling hub stretches its winning streak to an 18th straight month
Macau got off to a winning start to 2018 with gaming revenue rising the most since Beijing’s anti-corruption crackdown sent mainland high-rollers running for cover.
Turnover from casinos surged by more than a third in January from a year ago, the biggest increase since 2014 when the government’s sweeping campaign to rein in profligate and irresponsible spending by officials sent revenues spiralling to a five-year low.
Gross gambling receipts rose 36.4 per cent to 26.3 billion patacas (US$3.3 billion), according to figures released by Macau’s Gaming Inspection and Coordination Bureau on Thursday. That is the biggest jump since February 2014 and easily beat forecasts of a 27 per cent expansion, according to a Bloomberg survey of seven analysts.
Macau has been slowly recovering since August 2016, when it began to emerge from a gloomy period that began more than two years earlier when casino takings were severely dented by Chinese President Xi Jinping’s crackdown. Back then, a number of affluent VIP gamblers, many of them Chinese government officials, decided to give the gaming hub a miss for fear of being reported for their lavish lifestyle, which included splashing out on gambling activities.
Things started to pick up as more casual – or “mom and pop” – gamblers started flocking to the city, which is the only legal place for gambling in China. As such, January extended Macau’s winning streak to an 18th straight month.
However, analysts predict the overall growth rate for Macau’s gaming revenue in 2018 will be lower than last year.
International ratings agency Fitch Ratings said on Thursday it sees the territory’s casino revenues expanding by about 11 per cent this year, down from 19 per cent in 2017. Fitch also predicted that the mass market would outgrow the VIP segment, with the former expanding 14 per cent compared to the latter’s 8 per cent.
“The VIP segment continues to grow, but the growth rate began to decelerate in the fourth quarter last year,” said Alex Bumazhny, senior director for corporate finance at Fitch Ratings. “Fitch’s cautious position on the VIP reflects its inherent volatility and the potential for an economic slowdown on mainland China.”
“The growth rate in January is materially higher than our full-year estimation for Macau gaming revenue which is in the range of 6 to 12 per cent,” said Sophie Liu, associate director at S&P Global Ratings.
“But the volatility still remains for the sector despite the strong result in January, given the market’s susceptibility to policy changes, economic conditions, and pronounced seasonality.”