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Macau Gambling Industry Revenue Still Falling
- June 22, 2015 By Oliver Young -
The casino gaming revenue in Macau is constantly falling and in June, 2015, it has reached its lowest level since 2010. This information was revealed by top officials from the government who highlighted the steep fall of the casino gaming industry on Macau’s territory.
Lionel Leong Vai-tac, Macau’s Secretary for Economy and Finance, made a statement in which he explained that the total revenue of casino gaming in June could be as low as MOP 16b ($2b). This number is more than MOP 4b smaller than the total revenue for May. The Secretary also pointed out that the last four to five years there have been an average drop of 20% in gaming profit between these two months and hence there wasn’t a real reason to believe that the same pattern wouldn’t happen this year as well.
However, previous reports show that July and August tend to be the months when consumer participation reaches its peak and hence the government is having hopes that the same will occur in 2015 too.
Government May Run a Fiscal Deficit If Gaming Revenue Falls Below MOP 18b
In April, 2015, the Government of Macau announced that there might be fiscal deficit in case the monthly casino gambling revenue falls under MOP 18b. However, the Secretary Leong revealed that a MOP 15.7b this month would bring the monthly average down to MOP 20b.
In any case, the constant fall of gaming profit has started to be a real problem for Macau’s economy. Therefore, the government is believed to be preparing retrenchment measures to handle the crisis. Nevertheless, Leong claimed that there are no plans to cut neither social and medical services nor public sector salaries.
How serious is the situation in Macau can be captured by the opening of the Galaxy Macau’s Phase 2, which is the first only mega resort that was opened on Macau’s territory in the past three years. The group that owns the resort reported that the new venue is working okay and that the business was “satisfactory,” but not as good as expected.
Casino Revenue Fall Is a Result by the Loss of VIP Customers
According to Morgan Stanley Research Asia Ltd and their recent study of the gaming industry in Macau, the fall of revenue is a result of the loss of VIP customers. In the past, Macau used to make profit for five times bigger than the one in Las Vegas even though it didn’t have as large consumer basis as the US gambling heaven.
However, that happened in a time when fifty percent of Macau’s revenue was coming from elite and premium players that came from Mainland China and used to spend enormous sums of money at Macau casinos.
Things have changed in December, 2015, after the Chinese government launched an anti corruption crackdown that targeted Macau’s most precious players. As the government was trying to trace the source of the VIPs money, the VIPs started avoiding this, once very popular, gambling destination.