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Macau has reported yet another month of growth in its gambling sector. This marks the autonomous region’s 27th month of growth despite growth slowing compared to previous months.
October got off to a strong start with many Chinese tourists flocking to the island for Golden Week. Golden Week is a Chinese 7-day annual holiday, and usually starts around the beginning of October. The holiday filled up most of the casino hotels from the 1st to the 7th of the month. This led to a 14% increase in revenue, compared to the same time last year.
Overall growth has slowed with October showing only a single-digit increase. Year-on-year growth is the lowest for 2018 at 2.6%. This has been attributed to China’s economy showing diminished growth, and a Typhoon that forced casinos to close their doors for a day. The region has also seen fewer high rollers visiting when compared to previous years. Analysts site lower property prices and a turbulent stock market for this reduced figure.
The slow growth affected stock market prices but Wynn Macau Ltd and MGM China Holdings Ltd pulled up the final percentage with their 4.6% and 3.8% gains. The regions gross revenue has reached $31.422 billion, a 14.3% increase on 2017.
A Thriving Gambling Landscape
Gambling on the island of Macau was legalized in the 1850s, and today the island destination is known as the Monte Carlo of the East. Gambling contributes about 50% of the economy’s revenue, making it the largest industry. Visitors to Macau are mostly from China and Hong Kong, where most wagering activities are illegal, but a large number of overseas visitors also flock to the region to enjoy all it has to offer.
The continued growth of the gambling industry saw Macau surpass Las Vegas revenues in 2017.
The Future Of The Industry
Industry analysts have been warning the gambling sector that its reliance on VIP’s is cause for concern, as has been demonstrated by the revenue loses. Macau’s VIP’s account for 70% of the industry’s revenue, but growth for the gaming sector lies in the mass market, and businesses will do well to start catering to the every day player.
In addition, the Macau government is planning severe crackdowns on the junket sector, which could start proving problematic for VIPs. There are concerns that the junket firms in Macau are receiving funding via some unsavoury channels, such as China’s underground lending market. There is talk that new regulation may be implemented to better control junket firms with unknown consequences.