Macau caming revenue slips for sixth time in 2019

The figure represents a 3.2 percent drop from October 2018 but is up 19 percent from September’s 12-month low of $2.7 billion in revenue. Of the 10 completed months in 2019, six of them have seen decreases in year-over-year gaming revenue compared to just four with an uptick.

According to a Reuters report, the drop in revenue is consistent with what analysts predicted. Those same analysts from Sanford Bernstein are continuing to point to the same three factors that have caused decreases in prior months.

The trade war, civil unrest in Hong Kong and the regulatory uncertainty in the region have all led to high rollers staying away from the area. The trade war has had a negative impact on the Chinese economy itself, but also directly hurt the value of the yuan.

The drop in VIP gambling is the main difference between 2019 and previous years.

While high roller action has dropped, the masses have actually increased their gambling habits. The VIP gambling market in Macau dropped by more than 20 percent in October, but mass market revenue was up 12 percent.

The profit margin on the mass market is higher for casinos than it would be for VIP gamblers, however. Casinos do not have to split any profits from the gambling masses with junket operators. Junket operators help usher high rollers into the area casinos and will take a cut of the profit from the casinos.

There might be more people gambling, but the market will need to find a way to make up for the revenue dip that stemmed from the decreasing number of high rollers in the region.

Golden Week, a week-long national holiday in mainland China, usually brings an increased amount of action to the region’s gaming operators. This year, however, there was a 3.1 percent drop in tourism during the holiday compared to 2018.

Despite the lack in revenue, most casino operators reported profit gains at the conclusion of Q3. Melco Resorts & Entertainment, a gaming company with properties almost exclusively in Macau, set records for its mass market gaming operations during the quarter.

Melco ended the third quarter of 2019 with $1.44 billion in revenue, up a whopping 16 percent from last year’s numbers. Operating income on that revenue was $175.2 million and its net income was $83.2 million, which was more than 10 times the net income it earned in Q3 of 2018.