Posted on: November 1, 2024, 09:32h.
Last updated on: November 1, 2024, 09:43h.
Macau casinos generated a record revenue in October, surpassing any month since January 2020.
The October gross gaming revenue (GGR) data released by Macau’s Gaming Inspection and Coordination Bureau showed that the six casino operators earned MOP20.78 (US$2.59 billion) in revenue last month. This represented a 6.6% year-over-year increase and a 20% surge from September.
October saw a boost in revenue due to the strong National Day holiday in China, which began on October 1. Visitation during the festival rebounded, with daily border crossings averaging almost 142K, surpassing pre-pandemic levels.
The increased visitation led to October surpassing the previous best month of May 2024, with revenue reaching $2.59 billion. It was also the best performing month since January 2020.
Cumulatively, the casino revenue for the year through October reached $23.74 billion, marking a 28% increase compared to the same period last year. However, it remained 23% below the levels of the same period in 2019.
Challenges for Shareholders
Shareholder sentiment towards the six publicly traded casino companies in Macau remains cautious, nearly five years after the onset of the coronavirus pandemic.
The maintenance of zero-COVID policies in China until the end of 2022 delayed a post-pandemic recovery in Macau. Additionally, directives to crack down on money laundering and capital outflows have further impacted the gaming industry since the end of zero-COVID policies.
The operators were also required to invest significant amounts into nongaming projects as part of their new gaming licenses, aimed at diversifying Macau’s economy beyond gambling.
Investors are cautious about the outlook for Macau casinos, as shown by the decline in casino stocks compared to the broader market in October.
Market Challenges
Despite the positive performance in October, concerns remain for Macau casinos and their shareholders, particularly regarding China’s crackdown on unlicensed money exchanges.
The criminalization of unlicensed money exchanges will impact VIPs and high rollers, making it harder for them to transfer large sums of cash into Macau.
Travelers entering Macau are now subject to stricter cash limits, with additional scrutiny for those carrying more than $15K in cash.
The changes in regulations pose challenges for the casino industry in Macau and could impact revenue and investor confidence in the future.