Record 3-Year Low For Macau Gambling Growth

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(Photo: Stock.xchng)
(Photo: Stock.xchng)

BUSINESS

  • Macau gambling growth sees record 3-year low of 7.3% in May 2012
  • Weak Chinese economy affecting gaming industry
  • Sands China ends appeal to expand in Macau

Macau's Gaming Inspection and Coordination Bureau reports that Macau, the world’s largest gambling destination, saw revenue grow in May 2012 by 7.3%, which is the smallest percentage of increase since 2009. The number is also much lower than the 22% seen in April, and the 70%-90% growth rates seen in 2010.

Macau, located on the South China Sea, reports gambling revenue five times that of Las Vegas. It saw its initial industry boom aided by rising property values in China as well as a rise in disposable income.

However, those same factors are now hampering growth as the Chinese economy weakens, with property values down and stock markets hurting. At the end of last year, financial analysts were already predicting growth would slow in 2012.

Despite this past month’s weak growth, gambling is expected to expand in Macau.

Gambling in Macau began in 2002, and six casino operators have licenses to operate. License agreements for MGM China/Pansy and Stanley Ho's Sociedade de Jogos de Macau expire in 2020, while licenses for Sands China, Galaxy Entertainment Group, Melco Crown Entertainment and Wynn Macau expire in 2022.

The Macau government controls the conditions for licensing agreements, and future contract features could include higher payments and fees as well as a dictated amount of non-gambling attractions.

Casino taxes in Macau are currently set at 40%.

Sands China Ends Appeal

Meanwhile, the Chinese division of Las Vegas Sands Corp, Sands China Ltd., withdrew its appeal with the Macau government to build on a specific piece of land. The appeal was announced in a letter to the Hong Kong Stock exchange and was effective May 31.

Sands had been planning on building casinos and hotels on two plots of land known as Parcels 7 and 8 in the Cotai district. Both parcels are near Sands’ other casinos.

The Macau government rejected the company’s application, and an appeal was filed in January 2011. As per Las Vegas Sands 2011 annual report, some $101 million has been spent on the appeal. 

The Sands’ latest Macau casino opened April 2012.

Key Statistics - Macau Gambling Industry (source: AM Mindpower Solutions)

  • In Macau in 2010 the casino sector brought in over $23 billion in revenue, which is a significant increase over 2008, when revenue was $13.2 billion; the increase can be attributed to the rising number of visitors and strength of the Chinese economy.
  • Macau added nearly 1,300 gaming tables in 2011 for a total of 5,000 tables among six licensed casino operators.
  • Between now and 2015, casino and gaming revenue in Macau is forecast to grow at a CAGR of approximately 16%.

By Melina Druga for
Melina Druga is an American writer and editor. She is the author of Enterprising Women: Practical Advice for First Time Entrepreneurs.

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