IAG SEPTEMBER 2016 web - page 4

inside
asiangaming
september2016
4
Revenue risegivesMacauanewperspective
I
’ve long been of the opinion that Macau’s revenue slide
hasbeen far from theepicdisaster it’softenbeenmadeout
to be. After all, making
less
money is a long way removed
from
losing
money.
Nevertheless, it was a welcome relief to see Macau’s gross
gaming revenue record its first year-on-year rise in 27months in
August –up 1.1% toMOP$18.84billion.
In real terms, a rise of just over 1% isn’t much. It could
be reasonably argued that Macau was bound to return to the
black eventually, having edged itsway closer in recentmonths
with a 9.6% year-on year decline in May, 8.5% in June and
4.5% in July. Even now it’s far too early to say that themarket
has bottomed out.
Butat least the losingstreakhasbeenbroken.Psychologically,
it’s ahugemoment for the local industry.
The last timeMacau saw revenues risewasMay 2014, when
thecity recordedGGRofMOP$32.35billion.Since then, revenues
haveplummeted41.5%– adeclineof such scale and expediency
that it was commonly reported as some sort of Armageddon for
the local gaming industry.
The reality hasn’t been quite so dramatic, when put in
perspective.
Back in 2002, the year Macau’s gaming industry was
officially liberalized, the city’s annual GGR totalledMOP$22.1
billion. By the time it hit a brick wall in 2014, revenues had
soared toMOP$351.5 billion – an increase of almost 1,500% in
just 12 years!
So where does that leaveMacau’s 2016 GGR? As it stands,
the forecast has revenues for the year coming in at around
MOP$200 million, which depending on how you look at it
represents either a 1,000% increase on 2002 or a 43% fall from
2014. I knowwhichone I’d take.
Ofcourse,therearealwayswinnersand losers inthesesituations
and for thoseunlucky enough to invest inMacau’s casino industry
in early 2014, thepain is all too real. Yet for all thenegativity of the
past two years,Macau stands to rake inalmost five times asmuch
asLasVegas in2016–not bad for acityon thebrink.
Given the incrediblegrowthMacau enjoyedduring itsprime,
it’s understandable that expectation outstripped reality. But, as
Dr Allan Zeman described it when
IAG
spoke with him a few
months back, you can’t win the lottery every day.
What August’s numbers tell us is that Macau’s gaming
industry – for all of its wild fluctuations – is finally starting to
normalize. At the same time, the opening ofWynnPalace on 22
August and theParisianon 13Septembermeans that, by the time
many of you are reading this, four of the six concessionaireswill
have opened their long-awaited Cotai properties. One by one,
the list ofmilestones on the road to stability is being tickedoff.
Even the junket industry, which has suffered themost from
China’s anti-graft campaign, is settling down with the fringe
dwellers largely eradicated and a clearly defined “big three” –
Suncity,Neptune andTakChun– left tobring the sector into the
21st century.
Macau’s reality may well be very different from the one
envisaged just a few short yearsago, but at least now thebar has
been set. It’s amoment not tobe taken lightly.
BenBlaschke
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