Macau has reported its best ever gaming revenue for the first half of this year since 2014 but missed forecasts for gaming growth in June, giving rise to caution among industry analysts. According to latest government data, the combined gross gaming revenue (GGR) from the casinos stood at $15.7 billion for first six months of 2017, a jump of 17 percent over the same period last year.
The revival in Macau’s casino industry after more than two years of downturn has boosted revenue for casino operators in the region particularly Wynn Resorts and Las Vegas Sands – which have helped both companies to double their share prices in the past year. The downturn was triggered by the stringent anti-corruption campaign launched by the Chinese government in 2014.
The results for the first half are much higher than analysts’ expectations which were set at the beginning of the year but there still remains continued uncertainty in the market with regards to such growth being sustained.
The GGR growth for June was reported to be 25.9 percent as against analysts’ expectations of 26.8 percent as compiled by Consensus Metrix. Despite the miss, it was the 11th consecutive month of increase on a yearly basis and the best recorded since February 2014. Union Gaming analyst Grant Govertsen has attributed the miss to a slowdown in gaming activity in late June as a result of Chinese President Xi Jinping’s visit to Hong Kong. He noted that there was virtually a full lockdown in the area during Xi’s visit which might have impacted visitations to Macau.
Other analysts from Nomura and JP Morgan also agreed that the president’s visit could have led to the drop in revenues. Xi was in Hong Kong on June 29 for celebrations related to the 20th anniversary of its handover by UK to China. The President left the city on July 1. Macau gaming revenue is yet to bear the impact from the range of new anti-corruption and anti-money laundering measures such as banks requiring facial recognition for withdrawing money .Union Gamin analysts do not expect these measures to impact revenue significantly.
However gaming experts believe that Macau’s gaming revenue in the second half of this year is likely to be lower due to these factors. JP Morgan has predicted a growth of 11 percent in the third quarter and 4 percent in the fourth quarter. Union Gaming on the other hand has predicted 15 percent and 7 percent growth respectively. The growth could however see a sharp decline in case the Chinese government cracks down on easy credit and the ongoing housing boom in the country.