Macau gaming revenue is projected to grow nearly 10 percent in 2017, driven by new casino openings and an improving Chinese VIP segment, according to a new report by Fitch Ratings.
The agency is less optimistic about gaming revenue growth in Singapore.
Macau gaming revenues began rebounding in September after two years of declines prompted by a government-led corruption crackdown. A previous Beijing-mandated crackdown on corruption disrupted the high-end junket businesses that ferried VIP gamblers to Macau’s private gaming salons.
Gaming growth has averaged about 10 percent since September but slipped in January to just 3.1 percent compared with Wall Street expectations of 8.5 percent.
January growth may have been affected by one less Friday and Saturday compared with the year-earlier period. Additionally, the Chinese New Year started in January this year. Historically, there is a slowdown in Macau gaming before the the two-week holiday.
Despite the weak start to the year, Fitch analyst Alex Bumazhny still projects “mid- to high-single-digit growth in gaming revenue” for 2017.
Wynn Resorts Ltd., Las Vegas Sands Corp. and MGM Resorts International all stand to benefit from the Macau gaming revenue revival. Wynn Resorts and Las Vegas Sands generate more than half their gaming revenue from the Chinese market. MGM Resorts will see its Macau share increase when it opens a new resort on the island later this year.
Fitch says its growth projections could fall short if China resumes its corruption crackdown or if the nation’s housing market cools.
Macau gaming revenue has a 0.9 correlation with Chinese real estate investment, meaning a rise or fall in real estate investment will result in a similar shift in gaming revenue.
Fitch expects the Chinese economy to grow 6.4 percent this year.
Singapore gaming revenue is likely to remain stagnant this year at $4 billion as new casinos open in Macau and Philippines. Las Vegas Sands is one of two casino operators in Singapore and accounts for 60 percent of the market.
The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson.
Contact Todd Prince at email@example.com or 702-383-0386. Follow @toddprincetv on Twitter.