Macau's Year-Over-Year Gaming Revenue Decline ContinuesPublished January 12, 2016 by Florin P
Plummeting gaming revenue suggests that the golden days of Macau casinos are over.
For a couple of years, Macau has been a success story that Las Vegas casinos were telling with envy. After a few years of unprecedented growth, the gambling industry slowed down suddenly and the gaming revenue declined for the 19th straight month this December. While the wheels are still in motion and there is no reason to fear a screeching halt, the revenue decline is still worrisome for land-based operators.
Revenue Sinks Below $29 Billion
Macau casinos are still extremely profitable and in 2015, they won billions from gamblers, but compared to 2014, revenue dropped by more than 34%. December marked the second straight year of plummeting gaming revenue and this is bad news for a city whose economy revolves around casino gambling.
2016 is not expected to be any better and early estimates suggest that gaming revenue will continue to go down, but it’s not expected to cross into double digit territory. Land-based casino operators have good reasons to be frustrated by the sudden decline, given the fact that two years ago the casino gambling market was expected to inch closer to $88 billion.
It's Not All Bad News
One of the reasons for the slowdown is that the Chinese government launched an offensive against corruption in Macau. Since the crackdown began, the government scrutiny intensified and this had a deterring effect on many highrollers. There is no news about additional government regulations in the immediate future, but the specter of a smoking ban in Macau casinos is now looming.
The recent results had a negative impact on the stocks of most land-based casinos and Sands, Melco and Wynn were all affected. Macau has been an oasis of serenity and optimism for those betting heavily on brick-and-mortar casinos. Now that the revenue is plummeting, the online gambling industry could benefit from this interesting turn of events. Worldwide, many players made the transition to Internet gambling and the trend is expected to continue in 2016 and beyond.