Macau’s Gaming Revenues Reach $37.6 Billion in 2018

Tuesday, January 1st, 2019 | Written by April Bergman
Macau’s Gaming Revenues Reach $37.6 Billion in 2018

Macau gaming revenues rose 14% in 2018, according to the Gaming Inspection and Coordination Bureau. 2018 represents the second year of growth in a row. After the previous 26 months of decline, Macau’s gaming revenues have grown year-on-year for 29 months at present.

Overall revenue rose 16.6% in 2018, far surpassing the predicted 10% to 15% growth rate predicted by analysts at Reuters to begin the year. The faster growth of non-gaming revenue is a good sign for the Cotai Strip, as local officials have called for diversification away from gaming attractions in the past few years.

Despite appeals to the Chinese mass market with attractions at new integrated mega-resorts like Wynn Palace, Parisian Macau, Studio City, and MGM Cotai, Macau officials said the VIP high roller sector was the main reason for the 14% in gaming revenue increase.

Effect of Tariff War

The numbers were a good sign for the city, because many investors and officials were concerned that a slowdown in the Chinese economy and the continuing China-US tariff war would have an effect on gaming revenues.

Analysts continue to fear that the Chinese economy and the continuing tensions between China and the United States could be a drag on VIP gaming numbers especially. At present, though, it appears that the reluctance of Chinese high rollers to visit Las Vegas is the main casino-related casualty in the trade war.

Visits to the United States are down overall, with Asian visits to Las Vegas down significantly over the past two years.

Macau and Vegas Casino Revenues

Macau raked $37.6 billion in gaming revenues in 2018. While that is still off the reported $44 billion in the peak year of 2013, it places Macau well ahead as the leading casino city in terms of gaming revenue.

Las Vegas, the second-leading casino destination in the world, remains well below $10 billion in gaming revenues for 2018. Of course, Las Vegas gets almost two-thirds of its revenues from non-gaming sources, including rooms, food, beverages, shows, and other attractions. Las Vegas is on a pace to generate $18 billion in total revenues in 2018.

That still leaves Macau at twice the revenues of Las Vegas, even if one factors in Sin City’s non-gaming revenues. Macau also factors in non-gaming revenues, but it is a much smaller percentage of the economic picture in China’s gaming capital.

Hong Kong–Zhuhai–Macau Bridge

That might not always be so. Macau officials are hopeful that tourism-related revenues will continue to grow in the coming years. The Hong Kong–Zhuhai–Macau Bridge will link Macau with the mainland China’s Pearl River Delta and the financial center of Hong Kong.

Officials hope the bridge will guarantee more convention traffic and overnight stays, which could increase significantly if the mass market of Southern China and the business class on the mainland and in Hong Kong makes more visits to Macau.

Competition from Hainan Island?

Macau might count on day trips from Hong Kong and Guangdong province in the coming years, because of potential competition from Hainan Island. While Hainan Island’s five hotel resorts which allow gambling still have severe restrictions that Macau does not face, the Beijing government’s approval of casino-style gaming in Hainan in the past year is a trial balloon.

If all goes well, then a second Chinese casino destination might be approved in the next 5 to 10 years. Since Hainan Island is a tourist destination already and its beach facilities are a draw, it could provide a significant test for Macau’s gaming industry.

Macau still has a long way to fall to be anything but the No. 1 casino destination city in the world. While Las Vegas is having temporary troubles in 2018 and Singapore still has only two casinos, Macau is in the middle of a two-plus year expansion of its gaming revenues — and it has a long head start.