Free-falling Macau Searches for Answers

Lee R. - May 28, 2016

Stabilization is in sight, but solutions need to be devised to re-stimulate revenue gains.

Macau casinos are still in freefall. 

Searching for Answers

With Asian gambling hub Macau looking for new forms of revenue to offset losses brought on by their government's anti-corruption campaign, it appears time to take a closer look at online gambling for the traditional land-based gaming powerhouse.

Two Years of Losses

April marked the 23rd consecutive month of loss, as the struggle to offset revenue lost from VIP junket operators being forced out by the Chinese government continues.  

Macau's take for April came out to 17.3 billion patacas ($2.2 billion) in April, representing a 9.5 percent drop year-on-year from the same period in 2015, and down almost a full third since 2013.

The Drop

Before Chinese President Xi Jinping launched his anti-corruption campaign three years ago, Macau revenues were fueled by VIP junket operators flying in clients to Macau casinos and lending them money. 

Red Economic Curtain

Socialist leaders in the Chinese government began cracking down on these junket operations in 2014, out of concerns that the scheme was being used by wealthy citizens and corporations to move large amounts of money offshore and out of the government's reach.

As a result, the government has sought to find alternative forms of revenue. Billionaire hotel and marketing magnates Adelson and Wynn have added themes to their hotels to draw Vegas-style tourism. However, there is still a form of gambling which Macau has yet to tap into: online gambling, a sector where other countries are experiencing incremental boosts in revenue at little or no cost to them, and with relatively minimal costs to operators as well.

Increase Revenues through Gambling Activity

Since junkets are retooling marketing strategies to appeal to a more middle class tourist-centric audience, why not offer a more affordable form of high stakes play? Hosting online games combining competition from online players and physically present players could give that new segment the opportunity to participate in high stakes games.

At this point, it seems increasingly difficult to ignore the online option for stimulating revenues and adapting to Macau's the new era imposed on the Macau market.



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