Macao Casinos had been struggling but China’s Golden Week national holiday has moved the dice for a win. The decline was of major proportions at 90%, but now these venues have gotten a hit.
Among those enjoying long-awaited profits are the Las Vegas Sand, Melco Resorts & Entertainment, and Wynn Resorts. No matter that China is cracking down on casino junkets to stem the outflow of gambling money from the Mainland, as it pertains to markets beyond Macao.
The laws for alluring gamblers away from are strict with stiff penalties and jail terms. Many junkets have folded, and analysts see them dropping to 80% by yearend.
Junket operators have supplied Macao casinos continually with VIP gamblers. Yet business has been hampered by Beijing’s efforts to force casinos to promote their amenities to mass market tourists. The Cotai area casinos are a direct result of such policies.
Why such attention on the tourist sector? Of note, this segment is growing and represents over half of the gross revenues of casinos. Q3 baccarat figures have jumped 77%, wiping away horrendous Q2 declines.
So tourists are welcome, and every effort is being made to please them. The Sands complied with the new dictates by creating an Eiffel Tower attraction. The Wynn Cotai installed a gondola ride and offers multiple luxury stores.
As for Studio City International Holdings, a theme park graces the updated resort. It has a giant figure-eight Ferris wheel and a Batman flight simulator ride.
While the mass market is likely to be the biggest revenue driver in the future, the VIP market also needs some help. Junket operators have spent more time bringing VIPs that offer more profitable returns. In fact, analysts say high rollers find Macao a very safe place to bet.
VIP gamblers and their wealth are clearly back in the spotlight. Prior crackdowns on capital outflows were responsible for Macao spiraled into a two-year recession, which did nothing to promote VIP attendance.
Resort operators like Sands, MGM, and Wynn hoped Golden Week would be the beginning of a resurgence. It wasn’t as big as expected, but with travel restrictions now eased again and China’s economy growing more sharply than expected, the casinos may be back on the road to profits again.