Bet­ting on Ma­cao

Gam­ing hub hopes slew of new casi­nos spurs re­cov­ery

China Daily (USA) - - FRONT PAGE - By LUOWEITENG in Hong Kong sophia@chi­nadai­lyhk.com

A clus­ter of splen­did new casi­nos on the way to Ma­cao high­lights the op­er­a­tors’ ef­forts to lure gam­blers back. Hopes are high for a re­cov­ery in the gam­ing in­dus­try. Some think it is prob­a­bly on the cards.

That may be be­cause Ma­cao’s casino op­er­a­tors had another busy year of con­struc­tions. The world’s largest gam­ing hub last month added its most ex­pen­sive casino — the $4.2 bil­lion Wynn Palace from the sta­ble of US casino mogul Steve Wynn. Just a month af­ter that, Amer­i­can bil­lion­aire Shel­don Adel­son’s $2.9 bil­lion Parisian Ma­cao opened.

MGM Re­sorts will fol­low next year with the $3.1 bil­lion MGM Co­tai, while SJM Hold­ings is on track to open the $3.9 bil­lion Grand Lis­boa Palace in 2018.

Such a hive of new casi­nos comes af­ter Ma­cao’s gross gam­ing rev­enue fell 4.5 per­cent in July to $2.2 bil­lion, stretch­ing de­clines for the 26th month in a row.

How­ever, July’s rev­enue beat an­a­lysts’ es­ti­mate of 5.5 per­cent drop, fit­ting the optimistic tone of casino ty­coon Shel­don Adel­son and JP Mor­gan Chase that sees signs of a turn­around on the horizon.

Gam­ing has been part and par­cel of Ma­cao since the 1850s, when Por­tuguese ad­min­is­tra­tors made it le­gal and tax­able. Lo­cal gam­ing in­dus­try has ex­ploded af­ter for­eign casino op­er­a­tors were al­lowed into the mar­ket in 2002.

Ac­cord­ing to global rat­ings agency Moody’s, gam­ing ac­counts for 58.3 per­cent of Ma­cao’s gross do­mes­tic product and con­trib­uted to roughly 75 per­cent of to­tal gov­ern­ment rev­enues.

Ma­cao is the only place in China where gam­bling is le­gal. The ter­ri­tory ce­mented its sta­tus as the world’s No 1 gam­ing cen­ter in 2006, when its gam­bling rev­enues out­stripped that of Las Ve­gas for the first time. Dur­ing that time, the city’s casi­nos pulled in a record $4.57 bil­lion in rev­enue in a sin­gle month.

The Las Ve­gas of Asia started to lose some shine since 2014, how­ever, when Bei­jing’s crack­down on cor­rup­tion and ex­trav­a­gance amid floun­der­ing main­land econ­omy scared main­land high-rollers away to other re­gional gam­ing des­ti­na­tions.

Cam­bo­dia comes as an emerg­ing ri­val, whose Hong Kong-listed casino op­er­a­tor Na­gaCorp posted a 24-per­cent surge in net profit to $125.2 mil­lion for the first half of 2016, with a shiny new casino of 200 gam­ing ta­bles on the way in2017.

This com­pares Wynn Ma­cao’s 20.6 per­cent tum­ble in net profit to $1.14 bil­lion, and Sands China’s 25 per­cent de­crease in net profit to $551 mil­lion over the same pe­riod.

Stan­ley Au Chong-kit, chair­man of Ma­cao-based bank Delta Asia Fi­nan­cial Group be­lieves pol­i­cy­mak­ers’ tough stance on curb­ing gam­bling growth is a sure thing for the fore­see­able fu­ture.

“By 2018, at the lat­est, some casi­nos fail­ing to make ends meet would be forced to re­struc­ture,” he said. “But the point is, why does the mar­ket cling to the hope of a turn­around, de­fy­ing the fact that the gam­bling busi­ness has al­ready de­vel­oped ex­ces­sively in­Ma­cao?”

Even when a whop­ping 34.3 per­cent drop in profit sent jit­ters across lo­cal casino op­er­a­tors last year, the ter­ri­tory’s $29 bil­lion gross gam­ing rev­enue is still three times that of Las Ve­gas, six times of Singapore, and ten times of South Korea and the Philip­pines, said Ma­cao Chief Ex­ec­u­tive Fer­nando Chui Sai-on.

For the first half of 2016, Ma­cao’s $13.5 bil­lion gross gam­ing rev­enue was down 13 per­cent from a year ear­lier, but is still more than any oth­ers across the globe.

REUTERS

A vis­i­tor poses in front of an artist im­per­son­at­ing French em­peror Napoleon in­side Parisian Ma­cao, which is part of the Las Ve­gas Sands devel­op­ment in Ma­cao.

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