With Macau On the Rise, When and How Will Operators Feel the Benefits?
Published July 21, 2017 by Lee R
An incoming boost to land-based play should open the door for an online Macau market.
While land-based gaming rebounds in Macau, is it fast enough for major operators?
Macau GGR Grows
GGR did rise, but not at the pace that private investment needed. The actual growth was placed at 25.9% to 20 billion patacas, equalling volume of $2.49 billion. However, Reuters reports that forecasts for success ranged from conservative estimates of 23% to highs of 33%.
Private Operator Concerns
For land-based operators to feel comfortable, stocks need to grow as well. Instead, June delivered 50-day line losses, seeing Las Vegas Sands (LVS) fall 2% to 62.63 in the stock market; Wynn Resorts drop 2.3% to 131.01; MGM Resorts International (MGM) dropping 2.3% to 30.56; and Melco Resorts & Entertainment MLCO falling a full 45%.
Causes for Drop
Union Gaming analyst Grant Govertsen attributed the miss on projections to a visit to Hong Kong by Chinese President Xi Jinping at the end of June which he speculated to had “the effect of curtailing high-end visitation to Macau during this period.”
Causes for Future Optimism
Nonetheless, the reason for the President’s visit bodes well for longer term visitation: it turns out he came to inspect a multibillion-dollar bridge which will reduce travel time from Hong Kong to Macau from around three hours to about 30 minutes.
Set to open later this year, the island gambling Mecca that is China’s only legal gambling district will for the first time be accessible to the mainland in the space of a short commute time drive.
Obstacles to Online Play
Macau land-based operators clearly need to feel more comfortable and less vulnerable to regional economic developments in order to invest in their online gambling services, and lower their resistance to other online operators serving their customer base.
Forecast
The recovery from the restrictions of the Chinese government now in its 11th month and the incoming accessibility mainland players to the island of Macau looks set to raise land-based gambling activity significantly.
Online Projection
The spike will lessen major operator concerns about clearing profits over operating expenses and raise their comfort zone for investing in online gambling and online market entry from competitors.
Time Frame
The logistical convenience of the bridge for mainland players should allow operators expectations to be met, with a competitive online gambling market serving Macau rising in two to five years.
