by Marry on November 4, 2019

“Monte Carlo Of The East”, Macau is expected to have low single digit growth in 2020

Gambling in Macau has been legal since 1850, which makes it the oldest legalized gambling region worldwide. It was the Portuguese government to legalize the activity in the autonomous colony. Since then, Macau has been known as the “Gambling capital of the world” or “Monte Carlo of the East.”

It will be no surprise, that the main source of the revenue in Macau is exactly gambling industry and gambling tourism, which makes about 50% of the economy. Visitors mainly consist of Chinese nationals and Hong Kong. Macau even overtook the Las Vegas Strip in gambling revenue in 2007. Gambling in Macau can be divided into four categories, those are casino games, greyhound racing, sports betting as well as lotteries. What might actually surprise you, is that online gambling is not legal or authorized in Macau. Though it still remains the only special administrative region in China, where casinos are legal, and the business has grown ever since the government ended the four-decade gambling monopoly in 2001.

The Growth

With all of the above-mentioned taken into consideration, Macau is still expected to have low single-digit growth in 2020, the comment was made by Fitch Rating Inc for the Macau industry. So said Colin Mansfield, Fitch Ratings’ associate director, corporate ratings North America in comments aired on Friday by business news television channel CNBC. He was understood to be referring to gross gaming revenue (GGR) performance, one measure of industry outlook. “Basically expecting the VIP business to remain flat from where we are today: with some potential downside risk if things escalate a little bit further… [in] the U.S.-China trade war,” the rating house added shorty, regarding Macau.

Several notes were also made regarding the Chinese economy, which has grown and generally China is operating better in terms of domestic products. The gross domestic product (GDP) has a growing tendency for the mass gaming market. 5.7% growth rate is expected for Macau for this segment in 2020. The performance has shifted by 1.3 % year-on-year term in 2019, and 1.1% more is proposed to be seen in 2020.

The Low Single-Digit Growth Is Predicted

October’s result meant that the aggregate of Macau casino GGR for the 10 months to October 31 stood at US$30.57 billion, a contraction of 1.8 percent year-on-year.

On October 30, when Macau licensee Melco Resorts and Entertainment Ltd reported its third-quarter earnings, there certainly were some signs of the stabilization during the October segment seeen, which was proved via the words of the chairman and chief executive Lawrence Ho Yau Lung. Fitch’s Mr. Mansfield was asked by CNBC whether Macau mass-market gambling might come to be negatively affected if the U.S.-China trade war persisted.

There can, of course, be specific answers for the questions concerning war and the outcomes for the companies and the nations due to the war. For now, because of the very tense situation that is among China and the US, China has still managed to have growth in the GDP and is expected to have so in the following year. This fact can be the indicator of the country taking all responsibilities on itself and the will to have stability in the market and in the society.

The volume – and increase in volume – of mass-market visitors to Macau would help support that segment, which is under the question mark of improvement and enhancement due to the war. Such growth in tourism was aided by factors including infrastructure improvements such as the Hong Kong-Zhuhai-Macau Bridge directly linking Macau to Hong Kong’s international airport, and the linking of Macau’s mainland neighbor Zhuhai to China’s high-speed domestic railway network. Tourism in Macau is also a very important part of the revenue. Though most of the tourist attractions are connected to the gambling industry, if not fully then, it is an important role player in the contributions to the tourism asset.

The decision of the volatility recorded in Macau’s gaming-influenced gross domestic product, the city’s “concentration on the gaming sector and tourism from mainland China, and Macau’s susceptibility to changes in China’s broader policy environment”.

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