Beijing’s main representative in Macau said on Tuesday that the city’s casino industry had entered “an interim development period” that would allow for its stable growth in the future.
He added it was “normal” that gross gaming revenue (GGR) had dropped for consecutive months – eight at current count, and heading for a ninth sequential decline in February according to investment analysts.
The comments by Li Gang (pictured), director of the Central People’s Government Liaison Office in Macau, were made on the sidelines of a cocktail party given by the Liaison Office to mark Chinese New Year, which falls on February 19.
Investment analysts have previously indicated that Macau’s GGR fall is partly politically driven rather than a natural consequence of market forces, although they have mentioned the slowing of China’s economy as having an impact on the credit-based system used by the junkets to fuel VIP play.
But other factors cited by analysts include cooling effects on both VIP play and mass-market play related to initiatives of the local and central government. The moves include a tighter enforcement of rules on transit visas, curbs on the expansion of China UnionPay facilities within casinos and of misuse of unauthorised handheld UnionPay devices to provide cash to players. Another factor mentioned by analysts is the chilling effect of an anti-corruption drive on the mainland that has resulted in rich Chinese businesspeople seeking not to engage in conspicuous spending – including the dropping of large sums of money at Macau casino tables.
According to local media, Mr Li said on Tuesday: “After ten years of rapid development, the gaming industry has entered an interim development period.”
He added: “In this situation, I think it’s normal that GGR has dropped for consecutive months.”
The official continued: “Such adjustment is still within expectations. Despite it affecting GDP [Macau’s gross domestic product] to a certain level, GDP will not post as much decrease as it did during the SARS period.” That was a reference to an outbreak between November 2002 and July 2003 of Severe Acquired Respiratory Syndrome in southern China. The illness killed nearly 800 people worldwide according to the World Health Organization, and severely damaged the economies of Macau and neighbouring Hong Kong as tourists and business travellers stayed away.
Beijing’s representative added on Tuesday that Macau’s GDP under current circumstances would “remain in positive growth”.
“As such, the adjustment phase is a very good base for the stable development [of the gaming industry] in the future,” he stated.
Lionel Leong Vai Tac, Macau’s Secretary for Economy and Finance, the official charged with overseeing the city’s casino sector, on Tuesday confirmed at the same event that the territory’s government expected GGR to post a year-on-year fall this month. But he said that was not surprising against a background of record growth in February 2014.
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”We expect Goa to quickly become a US$1 billion market as it transitions to land-based casinos (from US$150 million today), which is still just a fraction of India’s total GGR potential of US$10 billion to US$17 billion”
Analyst at Union Gaming Securities Asia