Chinese Visitors Boost Macau Gambling Revenue
Macau, the world's casino capital, took in USD$4.4 billion in gambling revenues in March, boosted by robust demand from Chinese visitors keen to bet in the country's only legal casino hub.
Growth in Macau, a special administrative region like nearby Hong Kong, was up 13 percent in March.
A Portuguese colony until 1999, Macau earns the equivalent of Las Vegas's annual revenue in less than two months. Annual revenues reached a record USD$45 billion in 2013, elevating the tiny territory high above rival gaming destinations.
Gambling demand is seasonally more subdued in March after a surge in revenues seen during the week-long lunar new year holiday. February's revenue flew past expectations amounting to USD$4.8 billion, compared to Singapore's 2013 annual revenue of USD$6 billion and Las Vegas's USD$6.5 billion.
While 2013 saw rapid gambling revenue growth, analysts have more tempered expectations for the coming year due to macro economic uncertainties in China and the potential for slower credit growth that could impact liquidity of the high roller VIP segment.
The VIP segment, made up of high-rollers from the mainland, has for the past several years driven the bulk of Macau's casino business, making up 70-80 percent of overall gaming revenues.
However in the past year, slower growth has seen the VIP segment usurped by the rise of China's burgeoning middle class, which now accounts for over a third of total revenues.
One of the world's fastest growing-economies for the last three years, Macau has been a gold mine for gaming operators including US billionaires Sheldon Adelson and Steve Wynn whose companies, Sands China and Wynn Macau, posted strong fourth-quarter earnings.
Shares of Hong Kong listed casino companies jumped on Tuesday, as funds bought into the sector after government data showed a faster than expected pick up in revenue over the past week. March's monthly revenue was the third highest on record.
While no new casinos are set to open in Macau this year, the gambling hub will see the opening of eight new resorts over the next three years.
Low penetration and improving infrastructure developments that will shorten the journey from the mainland to Macau on China's southern coast are likely to continue to drive visitor growth and demand for gambling.
Macau's expansion comes as rival gaming destinations from the Philippines to Vladivostok in Russia are setting up casino resorts to lure wealthy Asian gamblers.
Local authorities and senior officials in Beijing are pushing to diversify Macau away from its reliance on gaming. The expansion of facilities for entertainment, retail and conventions are intended to attract a wider visitor base who come to Macau for leisure and tourism rather than just to gamble.