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Macau gambling revenue dips 49% to $2.4b in February

Macau gambling revenue dips 49% to $2.4b in February

HONG KONG: Gambling revenue in Macau plunged a record 49 percent last month, as wealthy players shied away from China’s only legal casino hub amid an economic slowdown and a crackdown by Beijing on conspicuous spending.

Revenue fell for the ninth consecutive month to 19.5 billion patacas, or $2.4 billion, in February, from 38 billion patacas a year earlier, according to data released by Macau’s Gaming Inspection and Coordination Bureau.

“We believe the biggest culprit for the weak month was the already-troubled V.I.P. segment,” said Grant Govertsen, an analyst at the research firm Union Gaming Research Macau. “Ultimately, while we believe there was a pickup in V.I.P. headcount, gaming volumes just weren’t there.”

A crackdown on corruption led by President Xi Jinping of China — a campaign that also aims at the illicit outflow of money from the country — could be blamed for the revenue decline in Macau, according to casino executives and analysts.

Macau casino stocks listed in Hong Kong rose between 1 percent and 3.5 percent on Tuesday. The decline in February’s revenue was within the range of 45 percent to 55 percent expected by analysts.

Shares have dropped 4 percent to 9 percent since the start of this year, sharply underperforming the benchmark Hang Seng index, which was up 5 percent for the same period.

The six licensed casino operators — Sands China, Galaxy Entertainment Group, Wynn Macau, SJM Holdings, MGM China Melco Crown — have taken a beating as outlook and investor sentiment has weakened.

Although revenue from Macau, the world’s biggest gambling hub, still remains more than seven times that of Las Vegas, a slowdown is highly visible in its 35 casinos.

During a recent visit by Reuters to four of the city’s glitziest casinos, V.I.P. rooms were mostly desolate.

Analysts expect the slowdown to lead to more closures of junket operators, companies that arrange credit, accommodation and travel for wealthy players.

“Notably, there were a number of mass tables empty on the third and fourth days” of the Lunar New Year holiday at the end of February, Wells Fargo analysts said in a research note dated Friday.