Macau Casinos Disappoint in June, Gaming Revenue Short of Analyst Expectations

Macau casinos announced on Monday that their gross gaming revenue (GGR) reached 17. 7 billion patacas (US$2. 2 billion) for June 2024. The total amount gathered by the six casino operators represented a 16. 4% increase compared to the previous year, but it was more than 12% lower than that of May.

The median forecast from analysts for June was 1. 1% above what was achieved. It was anticipated that the enclave’s casinos would experience a decline in June GGR compared to May when the Golden Week holiday occurred, and millions of mainland visitors came to the Chinese Special Administrative Region (SAR).

Historically, June has been a sluggish month for the casinos following the bustling May Golden Week. However, the failure of the slowdown to align with analyst predictions might suggest that China’s upper class, which has kept the casinos in Macau thriving for decades, is curtailing leisure spending amid an uncertain economic climate.

"A decline in spending by Chinese visitors, wary of splashing out on big-ticket items due to economic uncertainty, contributed to the slowdown,” Bloomberg reported.

Macau has had to depend increasingly on the mass and premium-mass markets, the latter involving visitors prepared to spend thousands of dollars per trip, though not necessarily at the casino tables.

Lackluster Data Points

The $2. 2 billion earned by the Macau casinos was nearly 26% lower than the June 2019 revenue figure when the same operators earned $2. 96 billion. June represented the lowest monthly total thus far in 2024.

Macau recorded 2. 7 million visitor arrivals in May, which is a 20% decrease from pre-pandemic figures. June's visitation statistics will be published later this month. The disappointing visitor numbers are a significant concern for the Macau casino industry, as the world’s wealthiest gaming center continues to shift from focusing on VIPs to attracting the general public.

The casinos were compelled to make changes by Beijing and China President Xi Jinping, who directed the Macau government to target junket groups amid the COVID-19 pandemic. Macau’s junket industry — the travel organizers that kept Macau’s high-roller areas vibrant for many years — is virtually nonexistent today.

In recent months, Macau casinos have started providing a variety of freebies to attract mass-market visitors. These incentives include complimentary snacks and drinks, which were previously reserved for high rollers before the pandemic.

The Macau SAR Government recently instructed the casinos to reduce the giveaways. The government’s choice came in response to nearby small businesses voicing their dissatisfaction over the decline in foot traffic attributed to the casino promotions.

China’s Economy

China is the largest manufacturing economy and exporter of goods globally, but the sector in June continued to experience contraction for the second month in a row.

China’s Manufacturing Purchasing Managers Index remained below 50 points at 49. 5. Ratings below 50 points indicate contraction while an index above 50 points indicates growth in manufacturing.

"One factor weighing on exports may be the marked turn in consumer sentiment and spending in the US, still China’s largest export market, in recent months. US consumer sentiment dipped to its lowest level since last November in May, according to a long-running survey from the University of Michigan,” The Wall Street Journal reported.

China's property market has also decelerated, just like the service sector.