Macau Casino Revenue Soars 28% to $3.18bn in April

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Monday, May 7th, 2018 | Written by Charles Washington

In April, Macau’s casinos posted a huge revenue gain, with the market rising by 28% to $3.18 billion compared to the same month in 2017. Experts originally forecast a gain of between 18-22%, which is still a significant amount, but the actual figures smashed it out of the park, with the massive increase having been achieved despite this April having one less Saturday than the same month last year.

World’s Biggest Gambling Hub

The Chinese territory of Macau surpassed Nevada as the gambling capital of the world in 2012, with China’s only legal gambling resort boasting some of the largest casino companies in the industry. This includes the likes of Sociedade de Jogos de Macau, Galaxy Casino, and Melco Crown, as well as a number of US operators, such as Sands China, Wynn Resorts, and MGM Grand Paradise, who own some of the biggest and most well-known casinos in Macau, such as Sands Macao, Wynn Macau, and MGM Grand Macau.

Share Prices Soar

US firms have been able to offset sluggish growth back home by heavily investing in Macau’s booming casino market, and these days, Sands generates 60% of its earnings from Macau, while for Wynn Resorts that figure is as high as 75%.

In 2009, Las Vegas Sands completed a public offering of Sands China Limited, which is a subsidiary that owns and operates its establishments in Macau. From this it was able to raise around $3 billion in equity by selling approximately a quarter of interest in Sands China Ltd. Wynn Resorts, which is more commonly known for its Wynn Macau arm, is an integrated gambling resort established in 2006, which three years later received a Forbes Five-Star award.

Needless to say, the latest news and revenue result for April has seen a big boost for shares of both companies, with Wynn Resorts stocks increasing by around 3% to $192, and Las Vegas Sands experiencing a roughly 1.5% price increase to $76.38.

Galaxy Expansion Plan

Meanwhile, Wynn sold a 4.9% stake of its company to the Galaxy Entertainment Group for $927.5 million this year, a casino company which operates six venues on the island, including the Galaxy Macau and StarWorld Macau, as well as owning the most amount of undeveloped land on the island.

Recently, Galaxy released its first quarter results showing a 32% spike in revenues to $2.36 billion compared to Q1 of 2017, with its mass market revenue rising by 17%, and its VIP revenue by a whopping 44%. The company has also announced a number of expansion projects moving forward, explaining:

“Our strong balance sheet combined with substantial cash flow from operations allows us to return capital to shareholders via dividends and to fund our development pipeline and international expansion plans.”

21 Months of Growth

The impressive growth and corresponding share price increase comes as no surprise as the revenue avalanche shows no sign of slowing down in Macau. While Macau’s casino market posted dramatic declines month-on-month from 2014 to mid-2016, the situation reversed after Chinese President Xi Jinping eased back on his anti-corruption drive, with April’s figures now marking the twenty-first consecutive month of growth for Macau.

The crackdown by authorities scared away thousands of players from many Macau casinos, particularly high rollers, but the market has since grown steadily over the past 2 years. Prior to the bad press Macau received in 2014 regarding corruption scandals, revenues were at an all time high and records were being set left, right and center. Whilst these latest figures are promising, especially in light of the 21 consecutive months of growth, they are still very far off the peak high revenue figures of S$45 billion posted in 2014.

High Roller and Mass Market Visitors

In April 2017, Macau generated $2.5 billion in revenue, meaning that the latest figures released shows a $0.7 billion increase in comparison, with experts concluding that the higher than expected growth was primarily due to solid gains noted in both the mass market and high roller segment.

High roller players, also known as whales, are gamblers who are known for betting big and are therefore assigned VIP status by casino establishments as an incentive for playing at their establishments. Commenting on the news, Stifel gaming analyst Steven Wieczynski stated that his firm could not “recall a time in which both market segments were trending at such encouraging levels.”

Grant Govertsen, a gaming expert analyst at Union Gaming, added that “With growth accelerating and both VIP and mass remaining above 20 percent growth, we remain bullish on the market and have a high degree of confidence in our [+17%] forecast for the year with a bias to the upside”.

Union Gaming, which collates detailed financial information and useful data for assessing the casino and gambling industry, initially forecast around 17% growth for the year, but they’ve now agreed that it could be much higher and finish the year much stronger. 2018 is already looking like a huge year for Macau’s gambling venues, and from January to April business has increased by around 22% to approximately $12 billion.