Au: No ‘new casino effect’
Macau Chief Executive Fernando Chui Sai-on says the dramatic decline of the city’s gaming industry will continue “for some time, but that won’t affect the population’s lives.”
Chui made the comment last week, after his annual policy address, reported the South China Morning Post. The chief executive said the industry “will suffer further adjustment pressure” through 2016, but social welfare subsidies will not be affected, and in some cases, may even grow. Through the revenue-sharing plan, permanent residents will receive 9,000 patacas (US$1,127), and non-permanent residents about half that. Public servants will see salaries rise 2.53 percent, he added.
According to Bloomberg News, Chui forecasts casino revenues of about 200 billion patacas (US$25 billion) in 2016, almost half what the jurisdiction reaped in 2014, and less than what it will generate this year. Gross gaming revenue fell in October for the 17th straight month, the result of China’s crackdown on corruption and a slowing economy.
Chui’s forecast is “conservative,” said Tim Craighead, Bloomberg Intelligence analyst. “We expect the mass-market to stabilize and recover, and we believe the VIP business has structural challenges that aren’t going away any time soon.”
Meanwhile, at the Macau Gaming Show, participants shared ideas on how to shore up the city: from more diversified tourist attractions to a greater emphasis on mass-market gamblers, as well as infrastructure improvements including improved transportation.
“The development of Macau relies on getting rid of its over-development on gaming,” said Professor Zhang Bo, of the School of Economics Peking University. He said the city should consider growing its sports betting industry. According to the Asia Gaming Brief, Zou Yanyi, chairman of Ao Da Li Ya Dong Fang Ji Tuan, said the territory should “attract the elderly and those who are retired and could stay in Macau longer.”
The show took place as Macau gears up for its November revenue report. AGB reported that Wells Fargo has reduced its estimates for the month, saying GGR will drop from 32 percent to 35 percent, despite new attractions like Melco Crown Entertainment’s $3.2 billion Studio City resort, which has done little to boost traffic in the casinos.
The city continues to weigh the possible impact of a full smoking ban in the city. After a recent meeting between the six gaming concessionaires and the Macau Legislative Assembly’s Second Standing Committee, Sanford Bernstein said the government will “be loath to make a decision while the gaming industry is still weak.”
Four casino employee associations told lawmakers they support a full ban, despite the likelihood that it could deepen the decline.
Meanwhile, the head of the Small and Medium Enterprises Association is not surprised Studio City, Galaxy Phase 2 and Galaxy Broadway on Cotai did not help to reverse the decline, TDM Macau reports. Stanley Au said, “The ‘new casino effect’ will not bring any good—and in contrast, I believe new casinos will bring deficit to the gaming corporations.
“Gaming companies were too ambitious when building the new casinos in Cotai. They shouldn’t have been built the new casinos,” Au said.
