Last updated: November 05, 2024
Macau’s casinos achieved a record $2.6 billion in revenue for October, the best month since January 2020, with year-to-date figures up 28% from last year. However, shareholder confidence remains low due to regulatory changes, significant investments required for non-gaming developments, and a recent crackdown on unlicensed money exchanges that previously allowed VIP players to transfer large sums. These factors continue to challenge the long-term outlook for Macau’s casino operators.
According to the Gaming Inspection and Coordination Bureau of Macau, the city’s six licensed casino operators produced gross gaming revenue of $2.6 billion or MOP 20.78 billion, up 6.6% year-over-year while 20% above in September, for October. Consequently, it became the first month since January 2020 with higher revenue numbers than the best month yet in 2024, a May revenue total of $2.52 billion.
Year-to-date, Macau’s total casino revenue has reached $23.74 billion, up 28% from the same period last year. However, these gains are still 23% below 2019’s pre-pandemic levels.
Shareholder Concern
Despite these improvements, shareholders remain cautious about Macau’s gaming future nearly five years after COVID-19 emerged. China’s “zero-COVID” policy delayed recovery until it was lifted in late 2022. Additional challenges arose from Beijing’s crackdown on money laundering and capital outflows, targeting Macau’s junket industry.
Further, the six operators-Sands, Galaxy, Wynn, MGM, Melco and SJM-have to infuse $16.2 billion in non-gaming projects under their new 10-year licenses that come into effect through 2032. The infusion aims at reducing the dependence on gambling and transforming Macau into a family-friendly or leisure destination for non-gaming sectors.
Investor sentiment remains cautious, as Macau casino stocks dropped 11.4% in October, outpacing the Hang Seng Index’s decline of less than 4%.
October’s performance provided some relief for casino shareholders in Macau as stocks gained by Friday. But new headwinds are on the horizon. China recently ordered Macau authorities to target unlicensed money exchanges that allowed mainland high rollers to transfer large sums of cash, a method previously used to bypass China’s strict capital controls. Now criminalized, these exchanges’ closure could make it harder for VIP players to transfer funds to Macau.
Travelers can only carry $15,000 in cash into Macau, with higher amounts requiring a lengthy customs process through the “Red Channel.” This increased scrutiny could impact VIP and premium players accustomed to bringing large cash sums to the enclave.
