Why Many Gambling Operators In Macau May Soon Go Out Of Business

Why Many Gambling Operators In Macau May Soon Go Out of Business

Macau, the Mecca of Gambling in Asia, is already facing slumping revenue growth largely attributed to the Sino-US trade war. Earlier in May, the Gaming Inspection and Coordination Bureau reported that the year-on-year gross gaming revenue in Macau, for April fell by 8.3 percent to 23.5bn patacas ($2.9bn). It was by far the most significant revenue drop since June 2016.

However, analysts have affirmed that once the slowdown in the Chinese economy is over, the revenue would be back on track.

The problem for gambling operators in Macau is not sluggish revenue growth, but the Chinese government’s new policies to develop Macau as a family holiday destination. As part of revised plans, China is now pushing gambling operators to develop non-gaming facilities to lure non-gambling tourists as well.

It has been reported that the operators who would fail to comply with the new directives would not get their licenses renewed – which are due to expire in 2022.

Following the shift in policy, licensed gambling operators in the Chinese Territory, have already been investing in developing facilities adding non-gaming offerings.

However, for most operators, the investment in non-gaming facilities is a financial burden as the returns on such investments are comparatively very low. Studies estimate that casino operators have already spent over $10 billion to boost non-gaming offerings.

Many operators have already added restaurants, shopping complexes, and convention centers – but that’s not enough. The city officials are pushing gambling operators to develop more state-of-art entertainment facilities to attract non-gaming tourists.

Given the current status of gambling venues in Macau, Sands China and Galaxy are the only two operators who would qualify on the parameters of having sufficient non-gaming infrastructure.

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