Macau’s casinos recorded their worst year, ending a decade of expansion that turned the former Portuguese enclave into the world’s biggest gambling hub. More tough times are ahead.
Casino revenue in the city fell 2.6 percent to 351.5 billion patacas ($44 billion) in 2014, after a record 30.4 percent monthly drop in December, according to figures from Macau’s Gaming Inspection and Coordination Bureau today. Analysts projected a 2 percent annual decline, based on the median of nine estimates in a Bloomberg News survey.
Chinese President Xi Jinping’s bid to catch “tigers and flies” in an anti-corruption drive and weaker economic growth mean Macau may face shrinking revenue until at least the middle of 2015, when new resorts open. The crackdown has deterred high rollers who account for two-thirds of Macau’s casino receipts, and wiped out about $73 billion in market value of companies including Wynn Macau Ltd. and SJM Holdings Ltd last year.
“The VIP heyday is over,” said Philip Tulk, an analyst at Standard Chartered Plc in Hong Kong. “The anti-corruption crackdown doesn’t look to be a short-term phenomenon,” with funds flows between the mainland and Macau being much more closely scrutinized, he said.
Xi has urged the city to diversify its economy and transform into a global tourism and leisure center. Macau’s casino takings are seven times that of the Las Vegas Strip and contributed more than 80 percent of the government’s annual revenue last year.
Sands China Ltd. and Galaxy Entertainment Group Ltd. were the second- and third-worst performers on Hong Kong’s Hang Seng Index last year. Wynn Macau shares fell 2.3 percent at the midday break in Hong Kong trading, while Galaxy and Melco Crown Entertainment Ltd. both dropped 1.8 percent and Sands China lost 0.5 percent. The Hang Seng index gained 0.7 percent.
–With assistance from Lisa Pham in Hong Kong and Dave McCombs in Tokyo.
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