Macau enjoys renaissance after mass market win
— The mood in Macau is buoyant once again. Gaming figures that tanked for more than two years after being hit by an ongoing Beijing corruption crackdown are up again, and the move towards mass market gamblers seems to have worked.
Semi-autonomous Macau is the only part of China where casino gambling is legal and a favorite haunt of mainland big spenders.
But after President Xi Jinping announced his war on graft in 2014, many stayed away from the enclave, which had gained a reputation as a money laundering centre for illicit cash flows out of China, with the crisis compounded by a growth slowdown on the mainland.
Casino giants have since launched a slew of new mega-resorts, offering everything from fine dining to theme park rides as they look to compensate for the fall in high rollers. Signs of a turnaround started in August last year, when Macau saw its first gaming revenue rise after 26 months of decline.
The gains have continued and it remains the world’s biggest gaming market, dwarfing Las Vegas in terms of revenue. Figures for February showed a 17.8 percent year-on-year increase, raking in $2.88 billion — three times more than Las Vegas.
“I think the downturn is well and truly behind us now. It took us a couple of years to weather that storm, it was unexpected, but we’re through that,” says Andrew Scott, CEO of Macau-based Inside Asian Gaming magazine.
Scott says revenues are now finding “normal growth,” rather than the stellar expansion pre-2014 — takings are still a third off the height of the boom.
An important core of VIPs who were not scared off by the graft crackdown account for around 50 percent of revenue but mass tables are also now thriving as glittering new resorts on the burgeoning Cotai strip add extra pull. With an increase in families visiting, some may choose to shop or see a show rather than gamble.
However, those who do hit the main floors are no minnows, with bets of $125 considered small potatoes.
“What’s high here and low here is completely different to the rest of the world,” says Scott. He attributes the money flow to China’s expanding middle class and continued economic growth, even withstanding the slowdown, with small business owners and high earning professionals among typical mass gamers.
‘Signs of life’
However, while casino takings are up, the intermediary “junket operators” that have traditionally brought most VIPs to Macau have taken a hit.
They lend money to high rollers at interest-free or low rates to help them get around limits on cash they can take out of the mainland. But many of Macau’s junket firms have gone out of business in the past two years, with gaming debt defaults contributing to their downfall.
There are now 130 registered operators, compared with 230 previously, says Tony Tong, risk analyst and vice chair of the Macau Gaming Information Association, which includes members from across the industry.