Macao’s casino revenue slows amid rising competitionBy Patrick Boehler Feb 17, 2013 11:54AM UTC
Macao, the world’s largest gambling hub, saw its casino revenue increase at the slowest pace at least since 2009, as more Chinese gamblers are willing to travel further and new restrictions on money-laundering are being felt.
Gross monthly revenue from gambling reached 26 billion patacas ($3.3 billion) in January, according to figures released by the semi-autonomous city’s Gaming Inspection and Coordination Bureau. Macao, a former Portuguese colony, is the only place in China where gambling is legal.
The increase of 7.3 percent is markedly lower than last year’s increase of 34.8 percent, an increase of 33.2 percent in 2011 and an increase of 62.5 percent in 2009, the earliest figures provided by the bureau.
The city with half a million inhabitants saw gambling revenue reach 304 billion patacas ($38.1 billion) last year, an increase of 13.5 percent compared to 2011.
The release of the figures coincides with a statement by the bureau’s deputy director Leong Man Ion to local media that he hoped that during the Chinese New Year peak travel week alone, Macao could maintain last year’s level of revenue of more than 1 billion patacas ($125.2 million).
Leong had told the Macao Daily in November that he expected growth in gambling revenue to slow down in 2013, saying that competition elsewhere in Asia was eroding the city’s position as destination of choice for Chinese gamblers.
Singapore, Malaysia, Laos, Cambodia and North Korea already operate casinos that cater for Chinese tourists. Even autonomous zones at Burma’s perilous border with China in Shan State operate albeit minuscule casinos.
More competition is yet to come. In the Philippines, a first casino complex is set to open in March on reclaimed land in Manila Bay. In South Korea, the city of Incheon has teamed up with investors to establish a gambling hub three times the size of Macao, which is supposed to cater especially for Chinese tourists.
Matsu, a small Taiwanese island off the Chinese coast, is about to get a casino resort, after its 7,800 voters approved the plan in a referendum last year. Even Japan is considering bringing in foreign gamblers to revitalise its struggling economy, as is Mongolia.
Another factor for Macao’s slower revenue growth could be an anticipated crackdown on junket operators, middle-men who arrange trips to Macao for mainland Chinese VIPs and find ways and means to transfer funds in the otherwise tightly restricted environment. The city as also reviewing its anti-money laundering legislation.
Meanwhile, Macao’s casino landscape is still expanding. In January, the city approved a second casino by MGM China with 1,600 hotel rooms, 500 gaming tables and 2,500 slot machines. Competitor Sands, owned by Las Vegas billionaire Sheldon Adelson, was allowed to add 200 tables to its latest resort, which opened last year.
Adelson, who already runs Macao’s biggest casino the Venetian, will be starting construction of another resort in the city catering for Chinese middle-class gamblers, the Parisian, later this year. When the project was revealed, the billionaire told local reporters that he remained positive in his outlook for Macao.
“This industry is a supply and demand industry. Las Vegas is being visited by around 13 percent of the US’s population,” he said. “If we get visited by 13 percent of the population here, by China, it would be close to 200 million visitations. This year we’re lucky to get 30 million.”
“Growth in Macau is supply-driven,” Lantis Li, an analyst at Capital Securities told Bloomberg last week. “As long as we have more hotel rooms to support the increase in the number of travelers, the growth can be sustainable.”