Posted on: November 1, 2024, 09:32h.
Last updated on: November 1, 2024, 09:43h.
Macau casinos won more money in October than any other month since January 2020.
On Friday, Macau’s Gaming Inspection and Coordination Bureau published the October gross gaming revenue (GGR) tally showing that the six casino concessionaires won MOP20.78 (US$2.59 billion) last month. October marked a 6.6% year-over-year increase and 20% surge from September.
October benefited from a strong National Day, China’s seven-day holiday that begins on October 1 each year to celebrate Mao Zedong’s establishment of the People’s Republic of China on Oct. 1, 1949. Visitation during the weeklong festival rebounded, with daily border crossings averaging almost 142K. The traffic exceeded pre-pandemic visitation.
Casinos benefited from more people in town leading to October topping the May GGR haul of $2.52 billion, previously the best gaming month for the resorts in 2024. October 2024 was also the best month since January 2020.
Through October, casino revenue totaled $23.74 billion, up over 28%, or $5.21 billion, from the same 10 months last year. But despite the gaming rebound in 2024, the January through October haul remained 23% below the same period in 2019
Shareholders Growing Weary
Shareholder sentiment regarding the six publicly traded casino companies operating in Macau remains subdued nearly five years after the coronavirus emerged.
China’s maintaining of Xi Jinping’s “zero-COVID” through the end of 2022 kept a post-pandemic rally on hold in Macau. Beijing’s direction to Macau to crack down on money laundering and capital outflow — both of which targeted Macau’s junket industry — has further hampered a gaming rebound since zero-COVID was ditched in December 2022.
Adding fiscal stress to the six operators is that they were forced to invest tens of billions of dollars into their resorts in exchange for new 10-year gaming licenses that run through 2032. Sands, Galaxy, Wynn, MGM, Melco, and SJM agreed to allocate almost $16.2 billion in nongaming projects during the life of the concessions.
The nongaming directive is designed to lessen Macau’s economic reliance on casino gambling and transform the Chinese enclave into a premier destination for leisure travelers, families, and nongaming businesses.
Investors, however, remain weary about the casinos’ outlook. Macau casino stocks were down 11.4% in October, while the benchmark Hang Seng Index was down less than 4%.
Market Headwinds
October was a needed performance for Macau casinos and the companies’ shareholders. Friday trading saw Macau casino stocks make gains.
Looking ahead, concerns remain for the six casino giants. Of utmost worry is China’s latest order that Macau police target unlicensed money exchanges that have commonly operated around the resort corridors for decades.
Such exchanges allowed mainland high rollers to wire money to the exchanges and collect their cash once inside the casino enclave. The unlicensed exchanges, unlike banks and other more legitimate financial institutions, had helped mainland high rollers circumvent Beijing’s strict controls on capital flight.
With unlicensed money exchanges now criminalized, VIPs and premium mass players will have a harder time transferring large amounts of cash to the tax haven of Macau.
Travelers into Macau are limited to carrying $15K in cash. Anyone with more than that amount must go through the entry port’s “Red Channel” processing system.
The Red Channel takes a considerably longer time for travelers to complete the customs process compared with the Green Channel where travelers have nothing to declare. Passengers facilitated through the Red Channel are liable to have their money and/or items confiscated unless they can give a valid reason for trying to enter with the assets, or CBNIs — Currency and Bearer Negotiable Instruments.
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