Macau confident about recovery but estimates “conservative” gambling revenue outlook

Yogonet News

The head of Macau’s government gave a conservative forecast for gambling revenue next year that’s 13 percent below analyst estimates amid a nascent recovery in the world’s biggest casino hub, Bloomberg reported.

Macau’s government is confident the economy will recover to grow by low single-digits in 2017, Chief Executive Fernando Chui said at a briefing Tuesday. Chui’s gambling revenue target is unchanged from his forecast for 2016, as the government seeks to limit the growth of its casino industry and pushed operators such as Las Vegas Sands Corp. and Galaxy Entertainment Group Ltd. to focus on tourists instead of hard-core gamblers.

“We didn’t set a higher target than this year because we think there are still uncertain factors,” Chui said, referring to his gaming revenue forecast of 200 billion patacas ($25 billion) for 2017. That compares with the median estimate of 230 billion patacas from five analysts surveyed by Bloomberg.

Macau’s casino industry has been recovering since August from 26-straight months of revenue declines as operators open family-friendly resorts, while a two-year slump in its gross domestic product has also eased.

The city’s shift from high-stakes Chinese bettors comes amid President Xi Jinping’s efforts to curb official corruption and limit capital outflow, ordering Macau to diversify from gambling during his visit two years ago

Macau’s recovery comes as China signals a crackdown on foreign casinos that woo its citizens to gamble overseas, detaining 18 employees of Australia’s Crown Resorts Ltd. involved in marketing to high-rollers. Macau’s gaming regulator chief Paulo Chan met with the city’s six casino operators after the incident, reminding them to obey local laws when working outside the gambling hub and adding that Macau gaming won’t be affected by the arrests.

Speaking at a casino industry event in Macau on Tuesday, Chan said the government will continue strengthening its laws to regulate the city’s gaming industry. The gaming regulator has also had several discussions on raising entry barriers for junket operators, middle-men who bring in mainland Chinese players and lend them money to play with, he said.

Analysts expect gambling revenue for 2016 will comfortably exceed Chui’s forecast, with the median of four estimates for 220.5 billion patacas, a decline of 4.5 percent from 2015. Macau has already reported 184.6 billion patacas in gambling receipts in the first 10 months of this year.

“The government has historically, and rightly, presented a conservative forecast as it relates to gross gaming revenue,” Grant Govertsen, a Macau-based gaming analyst at Union Gaming Group LLC, said by e-mail. “Based on trends we’re seeing today, we remain comfortable with our expectations for mid-single digit growth next year.”

Source: Yogonet

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