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September 2, 2016

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Macau’s gaming income gains end a more than 2-year slump

MACAU’S monthly gaming revenues ended a more than two-year slump yesterday, rising for the first time in 26 months, helped by multiple mega-resorts launching in the casino enclave.

A corruption crackdown by President Xi Jinping and a slowdown in the economy since mid-2014 have led to a plunge in revenues in the Asian gambling capital.

China’s clampdown drove away many mainland high-rollers who had propped up the VIP sector in Macau, the only place in China where gambling is legal. The city is now striving to diversify away from gambling.

Casino operators are hoping a slew of huge mass-market hotel and casino complexes, which offer everything from fine dining and malls to theme park rides and shows, will make up for the shortfall.

The push towards more reliance on the mass market seems to have worked, according to analysts, with monthly gaming revenue for August rising 1.1 percent to 18.84 billion patacas (US$2.36 billion), compared to the same month in 2015.

“The growth is driven by an increase in tourist arrivals and a better mass market,” gaming analyst Aaron Fischer said. “We’ve reached the bottom and things should start to improve next year.”

The US$4 billion Wynn Palace, complete with a giant lake, musical fountains and cable cars, opened in August.

Recent launches by Galaxy and Studio City have also upped the non-casino element, including everything from river rapids to an elevated figure-of-eight ferris wheel.

Las Vegas Sands will open The Parisian in September, featuring a half-size Eiffel Tower.

But despite the promising monthly rise, accumulated revenue for the year until August fell 9.1 percent at 144.39 billion patacas, compared to the same period in 2015.

“This year we may still see a decline for the full-year gaming revenues, but next year we should see an increase,” said Fischer, head of consumer and gaming research for CLSA.

“It will be largely driven by the mass market, and the addition of the new properties,”

He predicted monthly low single-digit growth for the rest of the year as the Wynn and Parisian openings have a positive impact on the fourth quarter.

Macau overtook Las Vegas as the world’s casino capital by revenue.


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