Casino industry in Macau ignored weakened consumer spending in China during December, because it saw a 433% increase in gaming income, and a return of the yearly take to 62.6% from pre-COVID levels.
Gross gaming income:
Gross gaming income managed to come to 18.6 billion patacas, which is approximately $2.3 billion, in December, according to data unveiled by the Gaming Inspection and Coordination Bureau on January 1. Additionally, the final result, 81.3% of the December 2019 total, was greater than the median analyst calculation of 402% annual growth.
On a related note, gaming revenue for the entire year 2023, reached 183.1 billion patacas. In addition, the Bloomberg Intelligence Index of 6 casino operators in Macau “gained” approximately 2.2% from 11 a.m. on January 2. In this sense, Sands China Ltd. jumped by 3.7% and MGM China Holdings Ltd. rose 5.4%.
Important Insights:
During the 1st year after China lifted its strict travel restrictions and lock-down polices, Macau, which depends on China for the majority of its guests, has experienced a stable recovery in its gaming section. In that sense, the industry has stayed strong despite China entering a months-long “economic slowdown“ boosted by a property market crisis.
As consumer sentiment declines, a shift in spending model has been a boon for casinos in Macau. The primary reason for this is that visitors want a variety of instant gratification activities, including entertainment, instead of shopping for luxurious handbags.
Furthermore, operators stated that per capita spending for high-end gamblers stays over 2019 levels. Also, some operators pointed out that premium guests have repeatably visited Macau despite a decline in spending in the said country, Morgan Stenley commented in a note last month.
Throughout mid-December, the average minimum wager was about 12% bigger compared to the time prior to the pandemic, and investors appeared more worried about “economic uncertainties“ than players, according to a poll by Citigroup Inc., according to Bloomberg.
However, it is likely to take years for gaming income to recover entirely after China clamped down on high-volume players, in addition to capital outflows, all of which led to the collapse of VIP sector in Macau, which accounted for half of the city’s pre-COVID gambling income. On that note, analysts predict that income could get back to around 76% of the levels it was before COVID-19, during this year.
The aforementioned Bloomberg Intelligence Index of casino operators in Macau increased 14.8% during December. However, it still experienced a drop of 19.1% for the whole of 2023. Additionally, the benchmark Hang Seng Index fell 13.9% for the whole of 2023.
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