Macau casino revenue declines 39 percent in March

At least it wasn’t another record decline.

Macau’s troubled casino market saw gaming revenue fall 39 percent in March, the region’s 10th straight monthly decrease, according to the Macau Gaming Inspection and Coordination Bureau.

The three dozen large and small casinos in Macau — including resorts operated by Las Vegas Sands Corp., Wynn Resorts Ltd., and MGM Resorts International — collected $2.69 billion in revenue during the month.

The 39 percent dip follows February’s single-month record 49 percent drop. The March figure also marked the seventh straight month Macau casinos have reported double-digit declines in revenue.

The downward spiral began last June when the Chinese government began a crackdown on corruption that has targeted the high-end junket operators who bring gamblers to Macau’s VIP casino rooms. Many of the junkets reportedly have ties to Chinese organized crime triads.

Wall Street analysts expect the gaming revenue declines to continue.

“At current trends, we expect April and May gaming revenue growth could be down 30 percent plus,” said Wells Fargo Securities gaming analyst Cameron McKnight.

One of Macau’s publicly traded junket operators, Hong Kong-based Iao Kun Group Holding Company, told investors on its fourth quarter earnings call that the crackdown put “small junket operators out of business.”

Iao Kun said the government crackdown would help legitimate companies.

“Arrests are made everyday,” company officials said on the conference call. “Eventually it will end, but we are hopeful by the end of 2015.”

For now, high end Asian gamblers are traveling to other destinations, such as Korea and the Philippines.

Macau casinos reported the reported the market’s first-ever annual decline in 2014, when gaming revenue fell 2.6 percent from 2013’s all-time single-year record of $45.2 billion.

Analysts are predicting casino revenue could top out at between $30 billion and $35 billion when 2015 is in the books.

Last month, Macau Chief Executive Fernando Chui told lawmakers in a public policy address that the region entered an “adjustment” period of slower and stable growth. Chui, who has been Macau’s top government leader since 2009, vowed to toughen regulation on the gaming industry when casino license renewals start taking place in the next few years.

Also, Macau’s tourism panel, under the chief executive’s direction, will draft a five-year plan for stable casino growth that will make the region less reliant on casino revenue. Macau, Chui said, will become a center of tourism and leisure travel.

Macau plans to implement visa restrictions that will curtail the number of times a year Mainland Chinese residents can visit Macau and a market wide ban on smoking.

JP Morgan gaming analyst Joe Greff tried to answer investor questions about Macau.

“Will results get less bad from here? On a year-over-year decline basis, the answer is most likely yes,” Greff said. “Do we think results are stabilizing? This is much tougher to say given the Mainland China anti-graft campaign and other policy issues.”

Macau ended the 40-year monopoly Hong Kong billionaire Stanley Ho had on Macau’s gaming market in 2000. American-owned casinos began operating in Macau in 2003.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.

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