Macau Casino Revenue to Hit $53bn in 2022

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Tuesday, November 7th, 2017 | Written by Shane Larson

Following three years of decline, Macau’s casino market has now returned 15 consecutive months of revenue growth, with a recent report by Morgan Stanley forecasting China’s only legal gambling resort to be worth $53 billion by the end of 2022. As part of the research subsequently explained:

“Our China economists are projecting the country to transition into a high-income country by 2027, which directly drives Macau revenue, and infrastructure should support more visitation.”

Revenue up 22% in October

The latest results released by the Macau Gaming Inspection and Coordination Bureau (DICJ) revealed an impressive 22.1% increase in revenue to $3.31 billion in October, compared to the same month in 2016. Furthermore, the figure was above initial analyst estimates, including the 18% forecast provided by Nomura, with the Japanese brokerage firm stating:

“Our latest consultant checks point to a noticeable pick up in demand following the 19th Party Congress in China, with VIP and mass revenue [for the month] up approximately 30 percent and 9 percent year-on-year, respectively.”

October’s results also represented a three year high for the island’s casino market, with an increase in VIP gamblers and the week-long national holiday that took place from the 1st to 8th of the month helping to bolster visitor number to the island resort, as well as the aforementioned Communist Party conference.

Overall, visitors to Macau were up by 11% compared to last year, despite the Golden Week holiday getting off to a slow start during its first few days. Commenting upon the positive result, Ben Lee from IGamiX stated that the strong demand noted in both the VIP and mass segments was helped by the Chinese government not telegraphing any intentions to further clamp down on the resort’s gambling industry.

A Return to Growth

For the first ten months of 2017, Macau’s gambling revenues are currently 19.2% higher at $27.4 billion, year-over-year. As a result, the world’s biggest gambling hub is now set to post its first annual increase since reaching a record high in 2013. The previous year, Macau generated $38 billion in casino revenue, initiating a corruption clampdown by the Chinese President Xi Jinping in 2012, and after hitting $45 billion in 2013, revenues started to decline and fell to $43.9 billion in 2014, and $28.8 billion in 2015, before contracting by a further 3% to $27.95 billion in 2016.

After three years of annual year-over-year declines, Macau therefore is set to return to growth in 2017, with the island’s casinos needing to generate revenues of just $600 million in November and December to complete the feat. The Chinese government is subsequently expected to receive around $11.5 billion by way of gambling taxes, or more than $2.5 billion than it originally budgeted for.

Improving Infrastructure

In 2018, Macau’s casino market will receive an additional boost with the completion of the HK-Zhuhai-Macau Bridge, with the vast 34 miles bridge providing easy access to Macau from both Hong Kong and the Guangdong province of Zhuhai at an overall cost of$15.9 billion.

Furthermore, Macau itself continues to offer more and more products for its visitors to enjoy outside of the casinos’ traditional gambling floors, with Taipa Village just one of the up and coming areas helping to draw holidaymaker to the island.

Optimistic MS Forecast

Looking ahead, Morgan Stanley has now forecast Macau’s casino market to reach $53 billion in gross gaming revenue (GGR) by the year 2022, barring any drastic changes to the the resort’s tax rates. The leading financial firm’s estimate is based upon a 6% increase in visitors to the island, and a 5% growth in spending.

More immediately, Morgan Stanley foresees revenue growth of 11% in 2018, and 12% in 2019. Furthermore, SJM Holdings and MGM China are expected to be instrumental in leading the growth, as both these operators are the latest to open new casinos in Macau. Consequently, these company’s have a high probability of doubling their profits, and tripling their dividend over the coming few years, while Wynn Macau, Wynn Resorts, MGM Resorts and Galaxy may also also experience a 100% upside if they are able to “pay the majority of their cash flows as dividends,” according to Morgan Stanley.