Hong Kong’s Financial Times announced August 19, 2015 that profits are still going down in Macau. The six largest casinos in Macau have seen a loss of 40% for the first 6 months of 2015. The decrease is a result of China’s President Xi Jinping’s end to corruption. Macau is the only location gambling is legal in China. The top casinos reported earnings of $3 billion for the first half of the year, but this is before taxes, interest, amortization, and depreciation have been taken into account. Last year the revenue was at $5 billion before these deductions.
Macau was enjoying a decade of growth, but in 2014 annual gaming revenue fell due to China’s bid to clean up the corruption taking place in Macau. It has effectively taken the high-rollers away from casinos. High-rollers were the biggest part of the growth seen in the last decade.
The pressure is only going to grow as anti-graft measures and junket operators are targeted to clean up their act.
Unfortunately, the government crackdown has come at a time where approximately $20 billion in new casinos and entertainment venues are set to open. Many of the facilities will open in 2015 and early in 2016.
Galaxy Entertainment, which is owned by Lui Che-woo, reported a 43% drop from year on year assessment comparing last year’s first half to this year’s. Total revenue has dropped 34% to $25.4 billion. The publication rounded up the results of the top six casinos including Melco Crown, Sands China, MGM China, Wynn Macau, and SJM Holdings.
Mr. Lui said the results are “credible” given the current “market conditions” Macau has to deal with. He believes his earnings have also suffered due to the new expansion on Galaxy Macau, which cost the resort complex $3.2 billion. Without VIP gamblers from China and other markets expanding Macau is in jeopardy.