\nBy Howard Stutz, Las Vegas Review-Journal<\/p>\n
\tIf we didn\u2019t know better, one might believe the Chinese government is trying to sabotage Macau\u2019s already sinking gaming market.<\/p>\n
\tNine straight months of casino revenue declines, including a record 49 percent drop in February, are primarily because of a government-imposed crackdown on corruption. Beijing is seeking to reduce the influence junket operators have on bringing high-end gamblers to Macau.<\/p>\n
\tApparently, more government restrictions are on the way. Government officials hinted at new visa restrictions that would limit the number of times mainland Chinese residents could visit Macau, a casinowide ban on smoking that is far more restrictive than last year\u2019s partial ban and other potential regulatory changes.<\/p>\n
\tThis comes as three Nevada-based casino operators with properties in Macau are spending billions of dollars on new hotel-casinos, and analysts continue to downgrade prospects for immediate investment in the world\u2019s largest gambling market.<\/p>\n
\tHong Kong-based casino operators Galaxy Entertainment and Melco are opening resorts this year. Market speculators wonder if the unveilings will have poor financial returns, similar to what took place in Las Vegas when new resorts opened in the depths of the recession.<\/p>\n
\tUsing the Chinese word \u201cTuhaos,\u201d a term that describes mainland Chinese people who are rich but uncultured, Hong Kong-based Macquarie Securities gaming analyst Jamie Zhou told investors Macau is at a crossroads. The market suffered its first annual decrease last year, and casinos lost $58 billion in market value in second-half 2014.<\/p>\n
\t\u201cOngoing visa restrictions, border congestion and weakening of regional currencies (are) prompting leisure Chinese travelers to head elsewhere,\u201d Zhou wrote in a research note. \u201cWe are cautious that high-roller Tuhaos in the premium mass segment are experiencing a similar structural decline trend as VIP players. The operators will have no choice but bring in \u2018less premium\u2019 players to fill up the new capacity.\u201d<\/p>\n
\tThe crackdown was initiated last summer by Chinese President Xi Jinping, who visited Macau in December to celebrate the 15th anniversary of the Special Administrative Region\u2019s handover to China by Portugal.<\/p>\n
\tThe junkets, many linked by international law enforcement authorities to Chinese organized crime triads, fill the ultraexclusive private gambling rooms of Macau casinos. High-end play largely fueled Macau\u2019s historical results. The market had a record $45.2 billion in gaming revenue in 2013.<\/p>\n
\tFollowing the president\u2019s visit, Macau gaming regulators told junket operators they must ensure clients have no criminal records before opening accounts.<\/p>\n
\tIn January, Alexis Tam, Macau\u2019s secretary for social affairs and culture, said the government will propose a full smoking ban in casinos, including high-end rooms. Analysts said last year\u2019s partial smoking ban, limited to main casino floors, contributed to the gaming revenue decline.<\/p>\n
\tThis month, Tam said \u201covercrowding\u201d in the tourist areas has a negative effect on daily life for locals. He suggested a potential cap on visitors could come this year.<\/p>\n
\t\u201cWith over $20 billion of capital being invested and over 10,000 hotel rooms likely to come online in the next three years, it is exactly these types of changes that keep market concerns elevated,\u201d Deutsche Bank gaming analyst Carlo Santarelli told investors.<\/p>\n
\tMacau Chief Executive Fernando Chui \u2014 the region\u2019s top government official \u2014 is expected to deliver an address that outlines his five-year market plan March 23. Casino operators and analysts will watch the speech closely.<\/p>\n
\t\u201cWith a predominantly new Cabinet in place, and a presumed directive from Beijing coming out of the National People\u2019s Congress, we expect more scrutiny on this speech relative to prior (speeches),\u201d Santarelli said.<\/p>\n
\tIn Las Vegas, the three Nevada companies \u2014 Wynn Resorts Ltd., Las Vegas Sands Corp. and MGM Resorts International \u2014 aren\u2019t backing away from previously bullish market predictions despite dire concerns in Macau.<\/p>\n
\tDuring an investment forum hosted by J.P. Morgan, company executives put on a happy face for the audience. All three casino operators said their new Cotai Strip resorts are expected to open in 2016.<\/p>\n
\tWynn Resorts President Matt Maddox said the company is \u201cmaking sure\u201d the $4 billion Wynn Palace \u201cwill be a market share taker.\u201d The new resort\u2019s 1,700 rooms will more than double what the company operates in its Peninsula resorts. He said he thinks the Macau government would be fair in its allocation of new table games.<\/p>\n
\tLas Vegas Sands President Robert Goldstein said the company \u2014 the first American casino operator to open a resort in Macau \u2014 has invested more in nongaming amenities than any of the six casino license holders. The same holds true for the $2.7 billion Parisian. Goldstein said there is still a place for junket operators going forward, but the role \u201cwill clearly be diminished relative to history.\u201d<\/p>\n
\tMGM Resorts President Bill Hornbuckle said the company is focusing on growing its position in the market \u201cdespite the tough near-term environment.\u201d After the $2.9 billion MGM Cotai opens, Hornbuckle said, the company plans to \u201creposition\u201d the MGM Macau on the Peninsula region.<\/p>\n
\tStifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said Macau is starting to resemble the transformation of Las Vegas from the 1980s into the 2000s, when the Strip began to rely more on nongaming attractions.<\/p>\n
\t\u201cAs the market begins the long journey to evolve from a gambling-only enclave into a total entertainment destination, we believe broadening Macau\u2019s appeal should enhance visitation and produce more predictable cash flows over time,\u201d he said.<\/p>\n
No replies were posted for this topic.<\/p>\n","protected":false},"excerpt":{"rendered":"
By Howard Stutz, Las Vegas Review-Journal If we didn\u2019t know better, one might believe the Chinese government is trying to sabotage Macau\u2019s already sinking gaming market. Nine straight months of casino revenue declines, including a record 49 percent drop in…<\/p>\n","protected":false},"author":36,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-8754","post","type-post","status-publish","format-standard","hentry","category-latest-casino-news"],"_links":{"self":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts\/8754","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/comments?post=8754"}],"version-history":[{"count":0,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts\/8754\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/media?parent=8754"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/categories?post=8754"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/tags?post=8754"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}