Bleak Outlook for Casinos in Macau
Macau has always been known as one of the most alluring gaming destinations across all of Asia. However, things seem to be taking a reverse turn lately.
Macau, the mighty gambling hub with the densest cluster of casinos in the Eastern and Northern Hemispheres, is on track to lose its power. The reasons for this are countless, with some already taking their toll on revenue.
The figures released by the Gaming Inspection and Coordination Bureau (DICJ) show that monthly gross gaming revenue (GGR) in January slumped for the first time since July 2016, and GGR in April dropped 8.3% compared to the same month in the previous year. Overall, during the four-month period, year-to-date revenue in Macau fell by 2.4% to $12.34 billion.
The dawn of 2019 is far from being rosy in the only region in China where gambling is allowed. And it might become even worse in the future.
Casinos Outside Macau
In May, The Wall Street Journal reported that, by 2021, gaming facilities worth $10 billion are expected to emerge in Asian regions, including Vietnam and Russia’s Far East, which is liable to spawn a new competitive market in Asia.
And then there is Japan.
The Japanese government has recently ruled on the authorization of casino resorts, with the first licenses being issued by 2025. It is estimated that $22.5 billion will be pumped into the industry, causing an operational nightmare for Macau casinos.
But this competitive headache is the smallest problem that the operators should care about.
According to the Statistics and Census Service (DSEC), among approximately 9 million visitors to Macau in 2018, more than 70% arrived from mainland China. Given the fact that the main flow of people comes from China, the region is soon likely to be on the verge of losing its most precious segment of gaming clients — the Chinese.
While Japan, Russia, and Vietnam are considered to be the new main forces that can lure away Chinese punters, there are other Asian countries that are already doing inconspicuous harm to Macau. The 2018 combined gambling revenue of Singapore, South Korea, Australia, and the Philippines soared 41%, whereas Macau’s growth fell to its lowest point in three years — an increase of 13%.
Yet the autonomous region, stretching along the south coast of China, made up more than 200% of Asian revenue in 2018. It’s still a gambling power to be feared. The question is, for how long?
GGRAsia has recently reported that Macau’s gaming industry will have to deal with a shortfall of over 7,500 employees by 2020. The expected shortage of workers ironically coincides with the time when new casinos resorts are slated to be built across Asia, as well as with the expiration of US operating licenses in Macau.
MGM International, Las Vegas Sands Corp, and Wynn Resorts Ltd. are American companies operating in the region — they own nine out of 41 casinos. However, their future in Macau is in question, as their licenses expire in 2022.
Macau’s gaming industry had 57,245 full-time workers in Q4 2018.
There are lots of gaps in the future of gambling in Macau, and the issue at the forefront of everyone’s mind is whether the regulatory body is able to bridge them.