Corruption Crackdown Costs - Macau Casino Revenues Collapse "Shockingly Bad" 53%

Tyler Durden's picture

Despite a 7% rise in actual tourist arrivals to Macau from China during this Lunar New Year's holiday, 'The Year of The Goat' is off to an extremely inauspicious start. As Bloomberg reports, even with expectations of a 40% drop, Macau casino revenues is now projected to crash a stunning 53.5% from last year. While a decline in VIP gambling was expected (due to, among other things, Xi's extreme crackdown on corruption - and the Macau money laundering schemes), JPMorgan notes, this was still "shockingly bad," as "even premium mass demand remained very muted," and marks the ninth straight month of decline, the longest losing streak since monthly records started in 2005.

 

 

The semiautonomous Chinese territory had a bad 2014, as total gambling revenue fell 2.6%, its first decline on record. Beijing’s corruption crackdown and the slowing Chinese economy together mean there are fewer wealthy Chinese willing to lose money at casino tables. As The Wall Street Journal reports,

The Lunar New Year holiday, a weeklong break for mainland Chinese, is typically a high season for Macau. But average gambling table revenue last week, which covered most of the holiday, fell a massive 55% from a year earlier, according to data cited by multiple analysts Wednesday. This puts the territory on track for a revenue decline of 50% or more for all of February.

 

The weak gambling numbers are especially disappointing because actual tourist arrivals to Macau from China rose 7% over the holiday, according to Barclays. The new visitors are apparently small-time bettors, or perhaps even non-gambling tourists, who can’t begin to make up for the loss of high rollers.

As Bloomberg reports, this year’s downturn comes despite a record high of more than 800,000 Chinese tourists flooded Macau in the first seven days of the Year of the Goat...

“Perhaps the Year of Goat isn’t a lucky year for casinos,” said UOB-Kay Hian Holdings Ltd analyst Victor Yip in an interview, adding that the VIP gambling business still accounts for at least 60 percent of Macau’s gambling revenue. “It won’t work if you only got retail customers but very few VIP gamblers as they fail to boost the gross revenue.”

Of course, it's not just gamboing revenues that are down...

The recent wave of mainland Chinese visitors also spend less than before, a further blow to the fine-dining eateries, luxury retail malls, and high-end hotels that casinos have set up next to their gambling halls. Excluding gambling, per-capita shopping expenses by Chinese tourists dipped 32.8 percent to 1,079 patacas in the fourth quarter of 2014, according to data from the Macau government.

 

Average occupancy at 3-star to 5-star hotels for the so-called Golden Week period of Chinese holiday, which ran from Feb. 18 to 24, fell 6.9 percentage points to 87.5 percent, while average room rates declined 15.4 percent, the Macau Government Tourist Office announced on Feb. 26.

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While casinos and hotels may be lamenting Xi's crackdown, having snared more than 100,000 “flies and tigers,” or low- and high-level officials, according to official data; 'the people' appear pleased, as one tourist noted:

“I’m proud of President Xi because he’s doing something significant and difficult,” Xu said. “Who knows whose money those guys in casinos are spending; if they’re officials, they could be spending mine.”

As far as trading this collapse...

After falling 40% in 2014, the six operators’ stocks are down an average 7% so far this year.

 

But they still trade at a not-so-cheap 16.4 times forward earnings, only slightly below their five-year average of 17.2 times.

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logicalman's picture

I want to get off this ride.

I'm feeling nauseous

TeamDepends's picture

OT (sort of):  Some web-savvy goats speak out on nethttps://www.youtube.com/watch?v=nlYlNF30bVg neutrality.

Four chan's picture

the day the spectacle of the degenerate chinese gambler ends, is when it all ends.

Soul Glow's picture

In China, gamling is tradition.

TheRideNeverEnds's picture

Why gamble in a casino and risk losing when you can just buy the market where literally every major power in the world is doing their best to ensure you only win till the end of time?

Creepy A. Cracker's picture

Not to fret...  The government will simply take more money from hard working people in order to bail them out.

steveharless's picture

sheldon addelson and steve wynn are licking their chops

www.ViewLasVegasRealEstate.com


patb's picture

more like licking their wounds. Most of Adelson's revenues come from Macau.

 

 

jeff montanye's picture

couldn't happen to a more deserving zionist.

HowdyDoody's picture

So he has less money to spare for his ambition to bu the next US president for Israel!

nmewn's picture

-53% is stunning only because its not a government number, its real. -53% government numbers are just mere anomalies and rounding errors, smoothing out over time.

Just like forecasted GDP! ;-)

Make_Mine_A_Double's picture

Sands, MGM etc are going to get Asspounded next few Q's. They get bulk of their Rev from Macau - Vegas is now an Indian bingo joint.

The_Prisoner's picture

The discerning Chinese official does not go to Macau, instead they put their money are in Australian real estate. With the acquiescence of the Oz government.

Element's picture

 

 

"The discerning Chinese official does not go to Macau, instead they put their money are in Australian real estate. With the acquiescence of the Oz government."

 

Prisoner, you are one twisted lying scurrilous little shit, practically everything you ever say or assert is the exact opposite of what's really occurring!

 

For example:

 

Foreign real estate buyers to pay fees of at least $5,000 under foreign investment review system - February 25, 2015

 

"For any foreign investor that wants to buy a residential property under $1 million, there will be a $5,000 application fee," he said.
 
"Over $1 million, it will be $10,000 for every extra million dollars in the purchase price.
 
"Secondly, there will be a new register set up so that we know how many foreign residential and agricultural property owners are in Australia, who they are, which is a very important form of reassurance to the Australian people.
 
"And, if anyone does break the law then we can fine them up to 25 per cent of the value of the property as well as forcing them to sell the property."
 
The fees outlined by the Government are much higher than those recommended in a report by the House of Representatives Economics Committee, which suggested an administrative charge of up to $1,500, with the money raised to fund the Foreign Investment Review Board (FIRB).
 
The Treasurer also said that businesses applying for FIRB approval to buyout Australian companies worth more than $1 billion would face an application fee of $100,000, while other applications to buy businesses would attract a $25,000 fee.
 

---
And this:
---

"The government will shortly put in place better scrutiny and reporting of foreign purchases of agricultural land and better enforcement of the rules against foreign purchases of existing homes so that young people are not priced out of the market.

These laws were not legally enforced by the former Labor government – not once."
 
Address to the National Press Club of Australia, Canberra - 02 February 2015

---
And what did the last Labor Govt do, and brag about doing in that area?
---

 

House debates
Tuesday, 23 September 2014
What are House debates?
Ministerial Statements
Investment
 
12:24 pm
 
Jim Chalmers - Rankin, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition

 

Hansard source

 
"Labor supports foreign investment. We see foreign investment as one way to create the jobs and to create the opportunities that might not otherwise be created or be made available in our economy. ... This is effectively the Keating model that so many of us on this side of the House see as an article of faith. Some of us joined the Labor Party to advance the cause of, for example, Asian integration and a more open economy and to do so in a way that gives our people more opportunities to prosper.
 
... Between 2008 and 2013—so for the period of the former Labor government—there was an investment boom. Foreign direct investment was up 40 per cent over that period, which is an extraordinary amount of growth and something that we are very proud of on this side of the House. ... There was an investment boom under Labor. His own speech refers to 40 per cent growth in foreign direct investment under Rudd and Gillard."
 
http://www.openaustralia.org.au/debate/?id=2014-09-23.5.1

--
And what is the current Govt doing, rurally?

http://www.abc.net.au/news/2015-02-11/commonwealth-tightens-foreign-inve...

--

 

 

Conclusion: 'Prisoner' is a twisted deceitful lieing arse, who hates reality, and is allergic to facts.

 

Dragon HAwk's picture

Look I loose 5 million in your casino.. you give me a 4 million apartment in California. we call it even..

 i think the money laundering crackdown, is the big news.   guy looses big  on the floor, finds a free hooker in his room, how much did he really pay for that tail..  The Chinese are very good at you scratch my back i scratch yours. and screw the paperwork.

  Obviously a few of the scams and systems were made ( public ) as in Government wised up.

Bemused Observer's picture

Maybe with all the gambling the wealthy have to do in day-to-day life, casinos just aren't that much fun anymore...

Their greed will eventually make even their own lives suck.

Bunga Bunga's picture

I tought Sheldon knows how to bribe for revenues.

AbbeBrel's picture

nah it isn't the gambling that is the story here. It is just that Macau got a hit in the big game of Whack-a-mole as the Chinese 1%ers continue to try to get their Yuans out of Dodgdan... ZH coverage from earlier - the graph above is impressive and for once deserves the moniker "Collapse" :-) over the situation a year ago.

http://www.zerohedge.com/news/2014-03-15/how-smuggle-money-out-china

Jack Daniels Esq's picture

Wall St is a better bet - except Musk bichez

Ms No's picture

Damn, that was a vewy profitable laundering gig.  Can't think of a better way to launder money than at an Asian gambling mecca.... shocking!  You pay now!

Dull Care's picture

The Chinese need more waiters and bartenders to get these figures back on track!