Macau Casinos Revenues Decline as China Is Stuck with Trade Wars and Political Protests

Macau Casinos Revenues Decline as China Is Stuck with Trade Wars and Political Protests

Casinos in the Vegas of the East are experiencing a steep decline in their revenues in 2019. An uncertain trade war with the US and political unrest in Hong Kong is taking a toll on the city’s casinos.

Where is Macau headed?

In November, the revenue of Macau casinos dwindled because of the uncertain political climate. This is the first time in three years that the city is eyeing an annual revenue decline. The city is missing high rolling patrons who could be affected because of the economic downturns in the country.

Macau Casinos Revenues Decline as China Is Stuck with Trade Wars and Political Protests

The gross gaming revenue for the casinos was 22.9 billion patacas (approx. $2.8 billion) in November, which marks an 8.5% year-on-year decline. The Gaming Inspection & Coordination bureau suggests a 2.4% decrease in year-to-date revenue. In October, casinos earned 26.4 billion patacas, making it the best month of 2019.

However, the numbers aren’t as bad as analysts expected who were concerned with high rollers delaying Macau trips. They expected a 10% to 13% drop in revenues this month. However, Hong Kong is not a major factor in the loss of gaming revenues. Hong Kong acts as a gateway for business to mainland China. Transport is disrupted in the region, and people traveling from Hong Kong to Macau have faced issues. Tourism in the former British colony is also disrupted, but executives and analysts deny any long-term effects.

Reasons behind weak figures

The protests don’t directly affect Macau but have added to other factors like weakening the Chinese Yuan and an overall slowdown in the mainland economy. Big punters have restricted liquidity in the gambling hub because of a recent attack on Suncity, Macau’s biggest junket operator, by the state media.

Chinese President Xi Jinping will visit Macau on December 20 to mark the 20th anniversary of the city coming under Chinese rule. Experts suggest that this visit will keep big punters away from the city till the official visit is over. Macau has also tightened its Visa policies ahead of the President’s visit. Kenneth Fong, an analyst at Credit Suisse Group, said that gaming revenues in December could be slimmer because of these rules.

Analysts suggest that short-term outlook for the region isn’t easy to predict. However, they expect conditions to improve in 2020 as the pent-up demand released and high rollers finally make a comeback to the region. They estimate a 3% increase in revenue during the year, which is a satisfactory result but not as great as the double-digit growth in the last two years.

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