Macau November Revenue is Lowest since 2010

Macau casino revenue fell 32.2 percent to $2.1 billion in November, which is the gambling hub’s lowest revenue since September 2010. This is definitely bad news for Macau since their revenue has now fallen 18 consecutive months.

Back in 2013, Macau casinos netted $45.2 billion in total revenue, which was up 19 percent from the previous year; this was approximately 7 times more than Las Vegas earned in 2012.

However, Macau’s slide started in June 2014, when revenue declined for the first time in five years. 2014 also saw overall revenue fall by 2.6 percent, which was the first annual drop in five years. Things are going even worse in 2015 because earnings are on pace to be 35% lower than last year.

The big problem remains the fact that the Chinese government has continued their crackdown on corruption, which has extended to their special istrative region of Macau. Casinos here used to derive a significant portion of their revenue from the VIP segment. However, this money is drying up in recent months amid the corruption crackdown.

Vitaly Umansky, an analyst with Sanford C. Bernstein, noted that the lack of high-roller play will only decline further thanks to shrinking benefits.

“It’s a paradigm shift,” Umansky said. “Everyone realizes that the V.I.P. business has gone through a structural decline, and it’s not coming back, and it’s definitely not coming back to the way it was before.”

Another reason why the rush of high rollers has slowed is because the junket business is less profitable. Junkets have been instrumental in bringing VIPs from the Chinese mainland, where gambling advertising is illegal. At one time, there were hundreds of junkets operating throughout China and feeding high rollers to casinos. Now, the number is shrinking since these companies are no longer seeing the profits that they once did.

Macau’s overall tourism business will also be affected by infrastructure issues. As Bloomberg reports, efforts to build a bridge from Hong Kong has been delayed at least a year. Bloomberg wrote that the delayed bridge “ties to our thesis of expecting a moderate mass gaming improvement in 2016.”

While the financial reporting hub does expect some improvement in 2016 following the big fall this year, it may be quite a while before Macau ever returns to its 2013 peak of $45.2 billion.