Inside Asian Gaming

inside asian gaming september 2016 4 Revenue rise gives Macau a new perspective www.asgam.com I ’ve long been of the opinion that Macau’s revenue slide has been far from the epic disaster it’s often been made out to be. After all, making less money is a long way removed from losing money. Nevertheless, it was a welcome relief to see Macau’s gross gaming revenue record its first year-on-year rise in 27 months in August – up 1.1% to MOP$18.84 billion. In real terms, a rise of just over 1% isn’t much. It could be reasonably argued that Macau was bound to return to the black eventually, having edged its way closer in recent months with a 9.6% year-on year decline in May, 8.5% in June and 4.5% in July. Even now it’s far too early to say that the market has bottomed out. But at least the losing streak has been broken. Psychologically, it’s a huge moment for the local industry. The last time Macau saw revenues rise was May 2014, when the city recorded GGR of MOP$32.35 billion. Since then, revenues have plummeted 41.5% – a decline of such scale and expediency that it was commonly reported as some sort of Armageddon for the local gaming industry. The reality hasn’t been quite so dramatic, when put in perspective. Back in 2002, the year Macau’s gaming industry was officially liberalized, the city’s annual GGR totalled MOP$22.1 billion. By the time it hit a brick wall in 2014, revenues had soared to MOP$351.5 billion – an increase of almost 1,500% in just 12 years! So where does that leave Macau’s 2016 GGR? As it stands, the forecast has revenues for the year coming in at around MOP$200 million, which depending on how you look at it represents either a 1,000% increase on 2002 or a 43% fall from 2014. I know which one I’d take. Of course, there are alwayswinners and losers in these situations and for those unlucky enough to invest in Macau’s casino industry in early 2014, the pain is all too real. Yet for all the negativity of the past two years, Macau stands to rake in almost five times as much as Las Vegas in 2016 – not bad for a city on the brink. Given the incredible growth Macau enjoyed during its prime, it’s understandable that expectation outstripped reality. But, as Dr Allan Zeman described it when IAG spoke with him a few months back, you can’t win the lottery every day. What August’s numbers tell us is that Macau’s gaming industry – for all of its wild fluctuations – is finally starting to normalize. At the same time, the opening of Wynn Palace on 22 August and the Parisian on 13 September means that, by the time many of you are reading this, four of the six concessionaires will have opened their long-awaited Cotai properties. One by one, the list of milestones on the road to stability is being ticked off. Even the junket industry, which has suffered the most from China’s anti-graft campaign, is settling down with the fringe dwellers largely eradicated and a clearly defined “big three” – Suncity, Neptune and Tak Chun – left to bring the sector into the 21st century. Macau’s reality may well be very different from the one envisaged just a few short years ago, but at least now the bar has been set. It’s a moment not to be taken lightly. Ben Blaschke We crave your feedback. Please email your comments to bb@asgam.com . Editorial