Macau Sees Steady And Encouraging Revival In VIP Gaming Revenue

The anti-corruption campaign launched by Chinese authorities in 2014 targeting Macau’s casino industry and VIP gamblers is finally slowing down and as a result gambling revenue in Macau is seeing a revival including VIP gaming revenue.

Casino revenue rose for the sixth straight month in January as reported by the city’s Gaming Inspection and Coordination Bureau although it was below expectations. Major casino operators like Sands China, Wynn Macau and Melco Crown Entertainment have all reported increased revenue in the last few quarters, heightening the belief of a recovery in Macau’s gaming market.

Reports show that VIP gambling revenue in Macau rose by 13 percent in the last quarter of 2016 to reach 33.3 billion patacas ($4.16 billion), the first revenue growth in nearly three years. Last week in a conference call with analysts, Lawrence Ho Yau-lung, the chairman of Melco Crown said that the anti-graft campaign by Chinese authorities was slackening resulting in improved visitation and revenue in both VIP and the premium mass segments.

Ever since the campaign started in 2014, high stakes gamblers frequenting Macau have kept away fearing increased scrutiny and prosecution, resulting in close to a 50 percent drop in VIP gaming. In response, the casino industry made a number of changes to adjust itself to the new trends.

Operators increased their focus on family-friendly and mass market-targeted offerings, which has played a major role in boosting visitation and has led to an increase in gambling revenue as well. A few analysts however attribute the gambling growth to the current record-high property prices in China.

According to Ho, customers and people who haven’t done anything wrong in past years do not have a fear of visiting Macau. Latest records of China’s anti-graft data confirm the slowing down of the anti-corruption campaign. Prosecution of Chinese bureaucrats has declined for the first time in 2016 since 2011. The report by Wang Qishan, head of the Communist Party discipline committee shows that last year around 11,000 officials were sent to trial in China, which is a 20 percent drop from 2015.

Industry observers on the whole feel that the industry is set for a steady recovery. In a statement Chelsey Tam, an analyst with brokerage Morningstar said,

Our conversations with industry participants in the VIP segment indicate that a cyclical VIP recovery is on the cards. We heard from several junkets that the number of players and the frequency of visits have increased, while the bet size per customer has not changed.