Macau Suffers Losses as High Rollers Stay Away
The recent crackdown by Beijing against corruption across the mainland and in Hong Kong is reversing strong growth in Asia’s biggest gambling market – Macau. Chinese high rollers are feeling the pinch, as evidenced by their reluctance to gamble in Macau. The world’s gambling mecca – no longer Las Vegas – reported a second straight month of declines in July, with a 3.6 percentage point drop from a year earlier. Allied with this decline are massive declines in high-end jewellery purchases, with a 20% drop during the month of June – for a fifth straight month of losses in Hong Kong.
Declining Numbers
The bulk of the traffic responsible for these sharp declines comes in the form of VIP players. It was these same players that put Macau on the map several years ago. These include the wealthy elite from China who frequent Macau casinos through intermediaries known as junkets. The number of high rollers visiting Macau dropped between 14% – 18% in July, in sharp contrast to the strong uptick in 2010 when their numbers increased by 70%. It is not only casino revenues that are declining, high-end luxury goods and jewellery sales have also been on a downward spiral. At the heart of this issue is the government’s clampdown on corruption which began two years ago.
Negative Revenues Becoming a Trend
The crackdown against corruption in China is likely to have a much more severe impact in the short term than previously expected. As for Macau, the last time it posted such negative revenue declines was during the financial crisis in 2009. In terms of actual numbers, Macau posted 7 times the revenue generated by Las Vegas in 2013 – that’s a whopping $45 billion in gambling funds. And of that figure, $30 billion came from the high rollers. The anti-corruption measures are focused on illegal transfers of funds to outside territories, and Macau is a big player in this industry. Politicians have been linked to the junkets and the transfer of funds from mainland China via the former Portuguese territory (Macau).
Chinese High Rollers Stay Away
Chinese players are reluctant to get embroiled in a sticky situation with the government, vis-a-vis corruption and the junkets. As it stands, the government in Beijing put strict limits on how much money the Chinese can remove from the mainland. Major casino resorts in Macau including Wynn Resorts Ltd and Las Vegas Sands Corporation have both posted losses during the last month, falling short of analyst expectations. However, casino executives remain optimistic as they feel that larger numbers of low-end gamblers are making their way to Macau casinos. In terms of actual figures, Macau gambling continues to grow at a rate of approximately 33% annually.
For more information on the latest casino news and updates, follow StarsCasino.uk.
