Macau gaming sector hurt by drop in visitor numbers
Gaming revenue in Macau dropped in October by 3.2% year-on-year despite the Golden Week holiday, according to data from the Gaming Inspection & Coordination Bureau.
As anticipated, the holiday provided a boost to visitor figures in October, which rose 11%. However, the influx was markedly below the 19% rise in visitor numbers in the corresponding month last year.
The year-on-year fall in gross gaming revenue of P26.4bn (£2.5bn/€2.9bn/$3.3bn) was in line with analysts’ expectations after monthly revenue fell to P22.1bn in the previous month – the lowest figure since September 2018.
In six of the first 10 months of this year, Macau has reported a fall in year-on-year gross gaming revenue, with significant drops of more than 8% registered in April and August.
At the end of October, cumulative gross gaming revenue for 2019 stood at P246.7bn, down by 1.8% in comparison with the P251.4bn generated in the first 10 months of last year.
Last month, a study by the University of Macau revealed that the percentage of people gambling in Macau had dipped to a record low of 40.9% so far this year – down from 51.5% in 2016.
In August, a 0.8% fall in gaming services exports was cited as a key reason for Macau slipping into a technical recession in the second quarter of the year.
Having for years been viewed as an automatic destination of choice for punters in the region, the proliferation of state-of-the-art casinos in neighbouring countries has in recent years given punters more options than ever before, and Macau has leaked VIP revenue to rival jurisdictions accordingly.
Macau lost $1.4bn of VIP gross gaming revenue last year to Cambodia, the Philippines, South Korea and Vietnam, with the total expected to rise to $2.6bn this year, according to a study released earlier this year by Union Gaming.
With an effective tax rate of 39% on VIP GGR, Macau has also lost high-rollers to other markets that offer better returns to junkets, with South Korea offering a 20% tax on VIP GGR, the Philippines offering 15% and Vietnam offering approximately 14%, when commissions are deducted from the statutory rate of 35%.
It also remains to be seen whether broad estimates of a 2-4% GGR headwind in Macau in 2019 due to the introduction of a smoking ban in public places such as casinos at the start of this year were overly optimistic.
Image: Brenden Brain