Macau Sees Revenue Rise With Adults-Only Policies
Macau, the Chinese territory, and a haven for the gambling industry has seen a recent boom. April 2017 was the ninth straight month in which gambling revenues rose in Macau. Stock prices have seen a coordinating boom, with shares in the Hong Kong-listed stocks Galaxy Entertainment, Sands China, and Wynn Macau rising in value by $20 million.
The boom can be attributed in part to a shift in Macanese casinos from an emphasis on VIP gambling to mass-market or “grind” gambling. Galaxy Entertainment attributes its year-over-year 5% rise in revenue to a 15% increase in mass-market table games. At the same time, Galaxy saw revenues from its VIP tables drop 5%. This helps Galaxy hedge against the kind of corruption China has recently cracked down on, such as officials betting with embezzled monies.
In no way should this be interpreted as a downturn in the Macau gambling industry. Wynn Palace, developed in 2016 by American luxury hotel and casino magnate Steve Wynn, has seen significant growth since it opened. Wynn Resorts in Macau are marketed specifically “for adults,” feeling no pressure to hedge its bets with family-friendly facilities. Contrast this with Wynn Resorts’ Las Vegas investments, at which 70% of revenues come from non-gambling venues.
Meanwhile, family-friendly non-gambling venues have seen a modest upturn in Macau. Although such facilities make up only 14% of Wynn Palace’s current net revenues, Galaxy Entertainment is explicitly marketed as family-friendly. Galaxy’s gambling facilities have no VIP tables, and Galaxy saw a year-over-year drop in revenues of 25%.
It may be the case that tourists and visitors to Macau aren’t interested in family-friendly venues. The managers of adult-oriented institutions see advantages to keeping up their practices, including the lack of need to book entertainment acts and maintain all-ages play equipment. It may be the case that China’s gamblers rely heavily on the easy availability of credit and that credit restrictions in China are tightening, but still, Macau gambling institutions aren’t yet seeing the need to branch out. So far, that strategy appears to be working for them.
Macau is an autonomous territory located about 60 km from Hong Kong. Although officially administered by the People’s Republic of China, Macau’s “one country, two systems” policy allows it its own legal and monetary systems. With a population of more than 650,000, Macau is considered to be the most population-dense territory in the world.
It also boasts one the world’s richest populations per capita as well as one of the world’s longest life expectancies. Whatever Macau is doing, it appears to be doing much of it right.