MACAU BUSINESS
Resorts’ local subsidiary, the Macau six gaming operators have had their gaming concessions extended for another 10 years, starting in 2023. A similar sentiment was also shared by U.S. gaming giant
Wynn Resorts, which controls the local subsidiary Wynn Macau Ltd. “The market roared back. Macau was a ranger on the mass side, on the direct VIP side, on the retail side, and on the occupancy side during Chinese New Year, and it outperformed our expectations for the lull period shortly thereafter,” said Craig Billings, chief executive officer of Wynn Resorts, also in a recent earnings call. In light of the recovery in recent times, market observers
have adjusted their forecasts for the Macau gaming industry this year. Investment bank Morgan Stanley raised its estimates on the earnings before interest, taxation, depreciation and amortisation (EBITDA) of Macau’s six casino operators in 2023 by 70 per cent and 6 per cent for 2024. The brokerage’s 2023 estimate of the Macau gross gaming revenue also went up by 37 per cent to US$22 billion (MOP177.7 billion), or about 60 per cent of the pre-COVID level. Financial research and consultancy institution Bloomberg
Intelligence also updated its forecast, expecting gaming revenue to reach 52 per cent of the pre-pandemic this year — or MOP152.1 billion — instead of only 42 per cent.
Room for recovery Meanwhile, the local government has envisioned that gaming revenue will reach MOP130 billion this year — or MOP10.83 billion a month — a goal that the city might finally achieve after failing to do so in the past three years amid the unprecedented public health crisis. Zeng Zhonglu, a professor from the Centre for Gaming and Tourism Studies of the Macau Polytechnic University, remarks, “If there are no other disruptions, I don’t think there is any problem for the gaming revenue to reach MOP130 billion or more this year. The 2023 result will certainly be the best year since 2019.” “The performance so far this year shows that travellers [in
the region] are less worried about the pandemic and more willing to travel again,” the scholar says. Among the visitors’ arrivals to Macau in the CNY holiday, the number of Hong Kong visitors recovered to about 70 per cent of the pre- 2020 level, while the tally of mainland tourists only resumed to about 30 per cent, an area that could be further improved in the remainder of the year and propel the gaming revenue, he adds. In addition to the lifting of travel restrictions, the mainland
has fully resumed cross-border travel with Hong Kong and Macau since February 6, including the restart of the mainland package tours to the two Chinese SARs that accounted for about 30 per cent of the mainland visitors to Macau prior to the pandemic.
Demise of junkets Nonetheless, Prof. Zeng emphasises that it is “impractical” to expect annual Macau revenue to return to the 2019 level of MOP292.46 billion due to Beijing’s crackdown on cross-border gambling and the fallout from the VIP gaming segment. Given the arrests of principal figures in the junket sector like
former Suncity boss Alvin Chau Cheok Wa, as well as the negative impacts of COVID-19, many local junket entities have wound up in the past three years. Government figures show there were only 36 licensed junkets this year — the middlemen that help casinos to attract high-rollers to splurge on gaming tables — down by 21.7 per cent from 46 a year earlier and over
APRIL 2023 17
62 per cent from 95 junkets in early 2020. A new law governing the operation of junket also came into
force this year, banning junket operators from sharing casino revenue with gaming concessionaires and from partnering with more than one gaming concessionaire. These were two conventional business practices for junkets up until last year. Upon the shake-up of the junket segment, VIP gaming
revenue, which comes from VIP rooms run by junkets and those run directly by gaming operators, only makes up less than a quarter of the total gaming revenue. The segment once made up as much as 70 per cent of the total at the peak of the gaming industry in early 2010’s.
MOP130 billion Macau government’s goal of gross gaming revenue for 2023
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