Macau Casino revenue dips in April as economic clouds gather

Just a couple of months after Macau saw an impressive rebound driven by the Chinese New Year, Macau’s casino sector growth hit headwinds again after April’s revenue forecast was downgraded.

Despite posting US$2.47 billion in gross gaming revenue (GGR) in February, April’s early daily gaming revenue of US$72 million already indicates a significant drop of 8% on March’s figures. It appears indicative of the industry’s yo-yo-ing recovery.

April’s estimates are in spite of the 14.7% surge in tourist arrivals during the Qingming holiday, with Macau casino operators already reporting a 3% revenue dip compared to figures for the same period last year.

Industry analysts are all pointing to what is becoming the perfect storm. The expected seasonal slowdown, renminbi (Chinese yuan) depreciation, and escalating US-China tensions are likely culprits for its dwindling performance so far this month.

In addition to these, the ongoing issue of Macau’s casino’s regulatory crackdowns – particularly in its efforts to eliminate illegal currency exchanges – appears to have spooked Asia’s premium casino high-rollers.

The reverberations of this come as operators attempt to become less reliant on the shrinking VIP sector. Instead, focusing on mid-tier mass-market tourist numbers to revive their fortunes, similar to Thailand’s own plans to capture a share of the sector.

As a result of April’s slow start to the month and mounting external factors, HSBC Global Research has lowered Macau’s estimated GGR for this month down to US$1.9 – US$2.2 billion. Contrast this with February’s robust GGR figure, and many insiders are already pondering whether these, too, might be optimistic.

The current downturn comes at a sensitive time, as Macau is also publicly grappling with rising gambling-related crime symptomatic of an uptick in visitor numbers.

Operators continue to invest heavily in non-gaming-related attractions in the hope of diversifying beyond their customary gambling demographic. However, critics remain skeptical that the new family-friendly entertainment approach will ever meaningfully replace lost casino revenues.

For now, the city’s casino economy remains in a state of flux. Should April’s casino revenue figures dip lower than initial expectations, it might mean Macau will need to rethink its stance to try to lure its VIP casino clientele back.