Macau Casino Woes Hit Hong Kong Billionaires
For the first time since the end of Stanley Ho’s gambling monopoly back in 2004, Macau casino revenue fell for the year in 2014. This report came as predicted with year-on-year revenue numbers beginning a significant plunge in June for the six casino licensees throughout the Special Administrative Region of China. As a result of slumping revenue, shares in each of Macau’s gambling giants have fell to approximately 47% of their highs from early last year, which has had a serious impact on the financial outlook of the leading casino tycoons from Hong Kong behind the Asian gambling giant.
Four casino tycoons from the Pearl of the Orient who were listed among Forbes’s list of Hong Kong’s Richest, including Lui Che Woo and three of the successors to Stanley Ho’s empire (daughter Pansy, son Lawrence and spouse Angela Leong), shared financial losses greater than $1 billion thanks to the drop in revenue. In the case of Lui, a drop of $7 billion cut his net worth by a third, down to fifth among Hong Kong’s most wealthy residents.
Experts account the drop in players to China President Xi Jinping’s new anticorruption policies, which have served to frighten honest players away from the tables as well as cutting illegal activity. Macau’s reputation as a hotbed for illegal overseas money shifting has caused ordinary players and travelers to steer clear of the destination in order to avoid unwarranted attention from state officials. Casual gamblers weren’t the only sector impacted during 2014, however. VIP revenue dropped by an estimated 11% from 2013 numbers as a result of new casino policies and promoter commission fees.
These factors are magnified by Beijing’s tightening of transit visa restrictions to combat waves of tourists remaining in Macau beyond their scheduled exit date. In addition, the recent student protests in Hong Kong have prevented tourists from scheduling a trip to the two cities, which are often visited together, to avoid political unrest. With a lack of new casinos and escalating tension with the capital, Macau is struggling to maintain the interest of wealthy Chinese gamblers who are, instead, taking their wagers to overseas destinations from Manila and Phnom Penh to Melbourne and Las Vegas to avoid the scrutiny of Beijing.
Analyst reports issued last week predict losses for the casino industry to bottom out in the first quarter of 2015, but expect improving revenue for the remainder of the year. Attractive stock prices and valuations could draw new investors into the global market entering the third quarter, but predictions for Macau remain hindered by the unknown. Without a change in policy from Beijing or expanded credit growth, the short-term future of Macau’s gambling industry remains difficult to predict. However, long-term expectations for the former Portuguese colony’s primary tourist attraction remain optimistic, according to a senior analyst with Wells Fargo.
For the time being, it appears as if Macau’s gaming revenue will continue its decline. With a rebound largely dependent on political policy shifts, experts are looking for a slow recovery for one of Asia’s premier gambling hubs.
