Gamblers in Macau are once again flooding the gaming tables, which is good news for the casinos that serve them.
As the only city in China that allows gambling, the city has had a rough few years. Tourism has fallen sharply as Macau and mainland China, its top source of tourists, have imposed strict quarantine restrictions. Casino revenue has fallen sharply, putting Macau below U.S. rival Las Vegas for the first time in years. Regulators are targeting high-roller Chinese gamblers who keep bookmakers flush with cash.
But gamblers are now flocking back to the newly opened Macau. This dynamism is also reflected in the profits of gaming companies, the most recent example being Las Vegas Sands, owner of Macau resorts such as the Venetian and The Londoner.
On Wednesday, the U.S.-based company reported revenue of $2.8 billion in its latest quarter, Beat analysts’ expectations $2.72 billion, more than double the $1.01 billion reported last year. The gaming company’s shares rose more than 5% in after-hours trading after the company’s earnings report was released.
CEO Robert Goldstein said in a statement He was “pleased” to see tourism recover in Macau and Singapore, where it operates another casino, and the company was “deeply enthusiastic about the growth opportunities in both markets over the coming years”.
Other casinos in Macau are also seeing a recovery. MGM China, which also operates in Macau, reported unaudited revenue of US$1.2 billion in the first half of this year, double the same period last year. (MGM will report its latest quarterly earnings at the end of the month). SJM Holdings, which operates the Grand Lisboa Palace Resort also reported Revenue in the first six months of 2023 is up 127% year-on-year.
Despite its name, Las Vegas Sands generates most of its revenue from Asia. Its billionaire founder Sheldon Adelson Focus shifts to Asia There are significant investments in Macau and Singapore. The company no longer owns any properties on the Las Vegas Strip after selling the Venetian Casino in Las Vegas to VICI Properties and Apollo Global Management in a deal that closed in 2022.
“Asia remains the backbone of the company,” Goldstein reply 2021.
Macau is the only region in China where casino gambling is legal. (The city, like its neighbor Hong Kong, operates under a different legal structure than mainland China). Before the COVID-19 pandemic, the gaming industry contributed more than half of the city’s GDP and provided about 17% of employment opportunities for the city’s 600,000 residents. Macau casinos generated approximately $36 billion in revenue in 2019; Nevada, home to Las Vegas, reported assets of nearly $12 billion Gambling income same period.
However, the city has been hit hard by the complete collapse of travel during the pandemic. Like other jurisdictions in China, Macau has imposed a strict quarantine for several weeks on arrivals, including those from the neighboring city of Hong Kong. In 2020, only 5.9 million tourists visited Macau, down from 39 million a year ago.
Beijing has also cracked down on so-called junkets that organize tours that it says help high-rollers evade capital controls and move large sums of money back and forth across the border with Macau. Since November 2021, authorities have arrested two high-profile junkets.
Macau is also looking for ways to diversify its economy away from gambling, with the city’s administrative secretary, Chang Wing-chun, asking gaming companies to invest in “non-gaming businesses” after renewing casino licenses last year.As part of the renewal, Sands committed to Investment of US$3.8 billion More than 90% of new facilities over the next decade will go to non-casino attractions.
The lifting of COVID-19 control measures has allowed tourists to return and start gambling.Quarantine-free travel crossing land borders Mainland China resumes in August 2022, Macau cancels All quarantine restrictions in January.
Macau gaming revenue Breaking through US$2 billion August, again Beyond Nevada Las Vegas revenue was $1.2 billion. China’s crackdown means a different kind of tourist is heading to Macau: mass-market tourists now come to Macau for gambling, shopping and entertainment, with the junket market virtually extinct, according to Macau media. wall street journal.
Sands’ quarterly results were better than expected even though arrivals have yet to fully return to pre-pandemic levels. The company said in its financial report that the number of inbound tourists from mainland China (excluding neighboring Guangdong Province) is currently 72% of pre-epidemic levels.
Las Vegas Sands owns five Properties in Macau include its big moneymaker, the Venetian Macau.
Singapore, home to Sands Group’s Marina Bay Sands resort, has also seen a rebound in visitor numbers. The number of international tourists visiting the city-state exceeded 1.1 million in September, an increase of 44.5% compared to the same period last year.
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