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Sharpest Drop in Macau October Gambling Revenues
- November 3, 2014 By Oliver Young -
Compared to October 2013, this year’s October is the worst month for land based casino gambling revenues in Macau, the world’s largest gambling hub, Reuters reports. The reason for the sharpest drop ever is the ongoing war on corruption, the reduced number of tourists and the slow economic growth, analysts say.
The casino gambling revenues in October in the former Portuguese colony dropped about 20 or 23 percent compared to the same time last year which mark the sharpest drop since Macau started keeping records. Moreover, October is the fifth month in a row of revenue declines after two years of fast growth when Macau surpassed the gambling revenue of Las Vegas by seven times.
It Is Worse Than Before
“Things in October are worse than they were,” said the executive director of Wynn Macau Ltd Steve Wynn. Wynn is currently building a $4 billion resort along with a lake and gondolas in Macau. “I don’t know how long this will last, but it is pretty bad,” he added. The revenues from casinos comprise 80% of the income of Macau.
The war against corruption in Beijing affected the gaming sector keeping high roller gamblers away. According to the data from the gaming and inspection bureau in Macau, the VIP revenue contributes a record low of 56% of the entire revenue in the 3rd quarter.
Other factors have also affected the gaming sector in the last six months. Low and mid roller gamblers often combine their visit to Macau with Hong Kong. However, after China restricted the access to Hong Kong because of pro-democracy protests the number of tourist visas also dropped. The visa restrictions in Macau also reduced the number of days visitors can stay and gamble.
The slow economical growth due to the tight credit conditions and the falling of housing prizes in the mainland, also affected Macau revenues. Casinos are also waiting to see what the ban on smoking in casino floors will cause. The ban took force in October.
Casino Operators Still Optimistic
Despite the sharpest drop ever in Macau casino revenues in October, casino operators are optimistic about the future. After all, Macau is still on track and expects to see eight new casino resorts opening their doors in the next three years. In addition, situation may improve since Macau casinos have huge average minimum bet of $270 which is 13 times higher than that of Las Vegas where the average minimum bet is just $20.
The chief executive of Las Vegas Sands Corp and Sands China Ltd Sheldon Adelson views the current situation in Macau as cyclical. He believes that it is just a matter of time before things turn around for the better. “Nobody has claimed that the behavior of Chinese and Asian people, established over a history of 3,000 years, is going to change,” he said in a post-earnings briefing.
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