Lawrence Ho: Seasonality more than money exchange crackdown behind recent softness in Macau gaming market

He also noted that gaming volumes have shown steady improvement since mid-July, with the impending completion of upgrade works at both City of Dreams Macau and Studio City expected to further support growth for the remainder of 2024.

Ho was asked about the impact of the money exchange crackdown – first announced by mainland authorities in May – during Melco’s 2Q24 earnings call overnight. The issue again hit the news late last week when Macau’s Legislative Assembly unveiled plans to criminalize money exchange gangs by classifying them as “Illegal Gaming Offences”, which are punishable by up to five years imprisonment.

“I think the money changer issue, it’s not new,” Ho said. “It’s been talked about for over a year now so it’s not a surprise to us.

“Of course, it has a bit of an impact in terms of liquidity to players, but I think the bigger issue in terms of the softness in June – and we saw growth in July already and August is off to a very good start – it’s more related to the Euro champs, which lasted from mid-June to mid-July.

“Also, this year the Chinese school holiday started two weeks later, so it didn’t really start until mid-July. What happens there is parents want to stay home and make sure that the kids are done with final exams before they travel.

“So, I think some of the softness that was seen in June and July, that was more of an impact rather than money changers. And with regards to the money changers, we’ve seen this in Macau over the years. I think this has been a story 10 years in the making. I don’t think it’s going to change the thesis into Macau dramatically.

“If anything, we’re very positive and optimistic about the future. I think what we’ve seen so far in August is a more typical summer so we’re happy heading into the second half of the year. And I believe that we will continue to see growth.”

Melco, meanwhile, continues to revamp its gaming floors, with work ongoing on the mass floor at City of Dreams Macau, new VIP slots areas in the works and a “reactivation” of the property’s entrance facing MGM Cotai and Wynn Palace.

At Studio City, recent work includes floor repairs, the repositioning of some tables games slots, and the opening of a new stadium and high limit area.

Ho said the work was designed to “re-establish our former premium mass leadership position.”

On the rollout of smart gaming tables, Melco said there were currently 30 tables online at Studio City with all 215 baccarat tables scheduled to become “smart” by October. City of Dreams Macau will follow suit by March 2025.

Also expected to open in early 2025, slightly later than previously planned, is the new-look House of Dancing Water resident show following a four-year hiatus, with Ho noting that rejuvenating the experience has proved more challenging than expected.

“It’s not just a return of the old show – we are adding some new elements into it,” Ho said. “You know, by next year it will be close to 15 years since we first opened [House of Dancing Water] and there has been some advancement in technology.

“The grand reopening, we want it to be a real spectacle, so we’re still hoping for end of the year but given how it’s a technologically heavy show with a lot of machinery, we are having some difficulties with some of the machinery.

“So, I think potentially it will probably open in Q1. At the same time, because it’s a grand reopening, I don’t want to eliminate certain acts from it at the beginning. I want to make sure that everything is available from day one.

“House of Dancing Water traditionally has given us thousands of people of additional traffic to City of Dreams Macau and it’s always been an icon of the tourism office of Macau. So, we’re excited about that.”