Macau’s gaming slowdown may continue into 2015 due to a lack of new resorts. Mass-market growth slowed even though VIP tables were allocated to mass gamblers on account of China’s anti-extravagance campaign. This kept high-stakes gambling at bay. Casino operators could face higher labor costs.
Macau casinos experienced a 20% year-over-year, or YoY, revenue decrease in November 2014. China’s slower economic growth also impacted the revenues negatively. Macau’s casino gambling revenue is expected to keep declining until mid-2015—when casino operators start opening new properties.
Union Gaming Research Macau suggests that GGR (gross gambling revenue) in December will be similar to November. This will be an ~25% YoY decline in December. Analysts expect that the revenues for January 2015 and March 2015 will be similar to November 2014 and December 2014. They expect that February 2015 will be down ~20% from this year’s record of $4.75 billion. This suggests an overall revenue decline of 20% for 1Q15. None of the analysts see a recovery until at least 2Q15—when new resorts open.
Fitch Ratings projects that Macau revenues will be flat for 2014. Revenues will fall by 1% in 2015 as traffic trends remain pressured. According to Fitch, a smoking ban in Macau casinos and the continued crackdown on corruption could be drags on revenue growth.
Fitch believes that the second half of 2015 should see an increase due to new projects from Galaxy Entertainment, Las Vegas Sands (LVS), and Melco Crown Entertainment (MPEL). Casino operators—like Wynn Resorts (WYNN) and MGM Resorts (MGM)—are also constructing casinos on the Cotai Strip. The casinos are scheduled to open in 2016.