Leong Man Ion, deputy director of Macau’s Gaming Inspection and Coordination Bureau (DICJ), is not expecting year-on-year growth in gross gaming revenue (GGR) in Macau to resume before mid-2015.
The rapid growth of the gaming industry since the liberalisation in 2002 was “possible in the primary stage of development,” Mr Leong told Xinhua, China’s official news agency.
But once the industry matured, it entered into a new development model featuring slower and steadier growth, he added.
Macau’s GGR has dropped every month since June in year-on-year terms – analysts link the slump to the ongoing corruption crackdown in mainland China. Some analysts believe the December numbers could eclipse October’s 23.2 percent drop and it is already expected that the city will suffer this year its first-ever annual casino revenue decline since the liberalisation of the market.
GGR in Macau for the calendar year to November 30 is at near standstill levels judged year-on-year. The accumulated total for the January to November period stood at MOP328.24 billion (US$41.1 billion), a year-on-year rise of only 0.3 percent.
“The performance of the casinos was not so bad,” Xinhua quoted Mr Leong saying. According to Xinhua’s report, DICJ’s deputy director predicted that the slump in GGR would continue until mid next year.
But he added: “The slower growth of the gambling industry has offered an opportunity to develop non-gambling elements.”
Macau’s six casino concessionaires have pledged to include more non-gaming elements in their new projects expected to open between 2015 and 2017, said Mr Leong, adding that this will allow for the industry to adopt a more sustainable development model.
According to the Bloomberg Intelligence Macau Gaming Market Index, Macau’s six casino operators have lost about US$75 billion in market value so far this year, a decline led by SJM Holdings Ltd, which saw its shares drop by 53 percent.
The outlook for December remains clouded by the visit of Chinese President Xi Jinping, who arrived in Macau on Friday. Mr Xi’s two-day visit marks the 15th anniversary of the handover of Macau from Portugal to China. He will also attend the inauguration ceremony of the territory’s fourth-term government – led by Chief Executive Fernando Chui Sai On – on Saturday.
Xi Jinping’s visit “could impact high-end visitation and depress results in Macau next week,” Wells Fargo Securities LLC analyst Cameron McKnight said in a note on Thursday. Mr Xi’s visit is expected to bring increased scrutiny on Macau.
VIP gamblers make up about two-thirds of Macau’s gaming market that contributed more than 80 percent of the city’s total revenue in the calendar year to November 30. But the impact on VIP play of Beijing’s clampdown on corruption caused Macau’s first year-on-year economic contraction since 2009 in the third quarter of 2014.
Japanese finance house Nomura last week said President Xi’s visit might bring little help to Macau’s struggling casino industry. An idea echoed by Philip Tulk, Hong Kong-based analyst at Standard Chartered Plc. “I expect Xi Jinping to talk in fairly stern terms that he wants this [Macau] economy to diversify and to move away from a casino-driven and, in particular, a high-roller economy,” Mr Tulk told Bloomberg.
“I’m not expecting anything to be distributed from his ‘goodies bag’, which we heard some in the industry talk about,” he added.
