Macau, the renowned gambling hub, has been charting a confident course towards economic revival, with internationally acclaimed ratings agency, Fitch, affirming a bullish stance on the region’s fiscal health. Providing Macau a “stable” outlook, the overseer of economic fortunes recognizes a significant rebound from the financial havoc wreaked by the recent pandemic. Following the easing of previously stringent travel curbs in early 2023, the gaming dominion has witnessed a robust influx of players, evidenced by a striking MOP19.3 billion in revenue generated this past January, marking the enclave’s second strongest performance post-pandemic.
As the currents of recovery flow, Fitch projects a surge in gross gaming revenue (GGR), speculating an attainment of approximately 79.5% of the esteemed 2019 levels by 2024. This optimistic foresight comes on the heels of a 2023 GGR already at 62.6% of pre-pandemic figures, outpacing budgetary expectations with a 7.6% edge. The prognosis credits an upswing in inbound tourism as a beacon of hope for the future of Macau’s famed gambling ethos.
Despite a slight 4.1% dip in February’s GGR to MOP18.5 billion from January’s highs, the industry still posted an impressive 79.1% rise over the same month in the preceding year. The accumulated GGR for the initial duo of 2024’s months soared to MOP37.8 billion, up 72.7% from the corresponding window the previous year, nearly three-quarters of the golden 2019 benchmark. The New Year festivities, heavily patronized by mainland Chinese visitors, played a pivotal role in this vigorous start.
The mass-market segment, characterized by regular punters, is anticipated to drive the vigour in Macau’s gaming resurgence. However, a word of caution is issued by Fitch regarding the elite VIP sector, which is expected to witness a more moderated recovery arc. This prognosis arises amidst Macau’s enhanced regulatory climes concerning junket operators, with a stringent bill rolled out in 2022 reshaping the landscape. Consequently, the mass market’s share of GGR jumped from 54% in 2019 to 75% in 2023, suggesting a shifting dynamic within the sector.
Fitch remains judicious, shining light on variables that may yet challenge Macau’s gaming paradise. The Chinese government, stewarding Macau under its sovereign wing, aspires to diversify the region’s economic profile, inching towards expanding non-gaming sectors’ contribution to gross value added from sub-50% levels in 2019 to target 60% by 2028. This strategic pivot aims to buttress tourism and cultivate non-gaming pursuits to forge more sustainable growth trails, propelling nascent industries in the process.
Adding to the watch list, the ripples from China’s broader economic tribulations could potentially skim the robustness from Macau’s fiscal ledgers, implying a cap on prospective regional growth. Nevertheless, Macau’s deft navigation of the crippling Covid-19 lockdowns has witnessed 2023’s gross income reach MOP183.1bn—a stellar 333.8% year-on-year surge.
SJM Holdings, a major operative entity within Macau’s gaming constellation, has seen its economic prospects uplifted from “negative” to “stable” by Fitch—a nod to the ongoing uptrend in visitation and gaming turnover. This cascade of success further spills over to Las Vegas Sands, which reeled in revenues amounting to $10.4 billion for the 2023 fiscal year, with Macau’s contribution rocketing 303.1% to $6.6 billion.
With Covid restrictions significantly unwound as of January 2023, Sands’ top brass, CEO and Chairman Rob Goldstein, harbors grand ambitions for the region, contemplating the market’s potential expansion to $30 billion and beyond. This acknowledges the enduring allure and enduring magnetism of Macau as a premier gaming destination on the global stage, with high stakes and high hopes of a lucrative future.
