Sands China, Macau

Macau’s gambling sector continued to exceed expectations in March as the region enjoyed 53.1 per cent growth compared to the same period last year. 

In total, 19.5bn patacas ($2.4bn), numbers that were bolstered by a growing number of visitors in the region – as footfall and tourism continued to grow significantly. 

The consistent easing of pandemic-like restraints and regulations were also integral to fuelling the revenues, however, the region has still never quite reached the heights of March 2019. 

It’s growth that will be viewed as a boost for the region though, as it defies analysts to continue on an upward trajectory in terms of engagement, traffic and importantly revenue. 

Recent years and the current economic climate in China has also seen a myriad of casinos in the region of Macau diversify what they offer to consumers –  becoming entertainment venues and tapping into a growing number of avenues to engage audiences. 

Underlining just how significant the period of growth in the Macau gaming sector, MGM China recently detailed that it no longer requires funding as it halted a lucrative revolving loan facility with controlling shareholder MGM Resorts. 

After agreeing the cancellation of the loan, it was also revealed that it was untouched as the region and the operator look set for a fruitful period amidst economic growth. 

Optimism came from significant success that has already been enjoyed by MGM in the region, as revenue was reported to have spiked in 2023. 

The growth was largely underpinned by an uptick when it comes to the recovery of the markets in the region, off the back of the easing of restrictions after the pandemic. 

In spite of the positivity a challenging era may well be ushered in for the casino sector in Macau, as regulatory frameworks around VIP players become increasingly stringent. 

Although tighter restrictions loom, Morgan Stanley recently provided a bright outlook for Macau’s gaming sector in the year ahead, with companies predicted to elevate their non-gaming investments significantly. 

Analysts at the bank outlined: “If we assume VIP recovery in Dec was 30 per cent of 2019’s level (23 per cent in 3Q23), mass recovery should be ~20 per cent above 2019. We expect Macau gaming companies to follow the Macau government and increase wages by two to three per cent in 2024. We also think the opex portion of non-gaming investment, and potential competitions for gaming hosts/sales, could put upward pressure on opex.

“On capex, we think companies will accelerate their non-gaming spend in 2024. Sands has the scale to have 76 per cent of its committed investment in capex while other operators will need to spend more on opex, which could impact their margin.”

In 2023, the region reported gross gaming revenue of $22.7bn, a staggering annual increase of 334 per cent. 

As a result of the recorded numbers, a stipulation has been triggered which will mean that the six major operators in the region will have to raise their spending on non-gaming investments by 20 per cent.  

In a recent comment from Las Vegas Sands, the group’s Chair and CEO, Robert Goldstein, emphasised his optimism for market growth as the firm continues to expand across Asia. 

“We are staunch believers in the growth of the Macao market near and long term,” Goldstein commented on LVS’ latest earnings call. 

“LVS has invested $15bn in Macau, which is the most important land-based market in the world. A few reference points to consider, third quarter EBITDA represents strong growth compared to previous quarters, as I mentioned. Our retail business in Macau has far exceeded pre-COVID numbers.”