Chinese high rollers back to Macau as graft crackdown slows
Wynn Macau, Sands China and Melco Crown Entertainment, three of Asia’s biggest casino operators, all reported recovering businesses for high rollers in 2016
China’s gamblers are flocking back to the world’s gaming hub on the country’s doorstep, as high-stakes gamers have had time to absorb the impact and adjust their style to President Xi Jinping’s crackdown on graft.
Wynn Macau, Sands China and Melco Crown Entertainment, three of Asia’s biggest gaming operators, all reported recovering businesses for high rollers in 2016.
The anti-corruption and anti-extravagance crackdown in China has subsided, contributing to the recovery in Macau’s businesses for VIPs and the premium masses, according to Lawrence Ho Yau-lung, the billionaire chairman of Melco Crown, during a conference call with analysts on Thursday.
Macau’s gambling industry had been in the doldrums since 2014, a year after Xi began his crackdown on graft and extravagance, putting the profligate spending habits of scores of thousands of officials, military men and business tycoons under scrutiny and investigations.
As hundreds of so-called tigers (senior officials) and flies (junior cadres) end up behind bars, a chill has descended on the former Portuguese colony, which had already surpassed the Las Vegas Strip as the gambling capital of the world.
High rollers who contributed two out of every gambling pataca spent in Macau’s casinos shrunk by half over the past three years.
As China’s anti-graft campaign continued, people started making adjustments to their habits and absorbed the impact. In the last quarter of 2016, Macau’s VIP gambling revenue rose 13 per cent to 33.3 billion patacas (US$4.16 billion), reversing three years of slump.
“Our customers, and the people who really did nothing wrong over these years, don’t have a fear of coming to Macau,” Ho said.
Ho, 40, and son of Asia’s gambling mogul Stanley Ho Hung-sun, is one of the top players in the southern Chinese enclave, running the US$2 billion Studio City on Macau’s Cotai Strip and the US$1.6 billion City of Dreams in Manila, among other casinos.
“Our conversations with industry participants in the VIP segment indicate that a cyclical VIP recovery is on the cards,”said Chelsey Tam, an analyst with Morningstar. “We heard from several junkets that the number of players and the frequency of visits have increased, while the bet size per customer has not changed.”
At Wynn Macau, the VIP baccarat game had been “finding its feet” over the past two months, and the segment had “bright prospects,” the casino’s president Ian Coughlan said to investors last month.
Melco Crown’s fourth-quarter volume by high-stakes gamblers gained 8.8 per cent from a year ago, while both Sands China and Wynn Macau booked narrower declines in VIP revenues compared with the previous years.
Some analysts attributed Macau’s gambling recovery to China’s record property prices, which increased confidence.
Ho could have taken his guidance from China’s anti-graft data, which shows that the pace of jailing corrupt officials has slowed. Prosecutions of Chinese officials dropped in 2016 for the first time since 2011, according to a work report by Wang Qishan, who heads the Communist Party discipline committee.
A total of 11,000 bureaucrats were sent to courts for trials in China last year, representing a 20 per cent retreat from 2015, the report showed.