Macau casinos suffer worst year amid anti-graft push

Tourists look at the view from the historic part of Macau on December 20, 2014 (AFP Photo/Isaac Lawrence)

The world's gambling capital Macau saw its first annual decline in casino revenues in 2014, figures showed Friday, with a corruption crackdown by the Chinese government ending a decade of booming growth for the industry. Official figures published by the former Portuguese colony showed that gaming revenues fell 2.6 percent year-on-year to 351.52 billion patacas ($44 billion) in 2014 -- the only decline since annual figures were first released in 2002. Last month's takings were especially dire, plunging a record 30.5 percent year-on-year to 23.285 billion patacas -- marking a seventh consecutive month of decline and the biggest drop since the gambling hub began recording monthly revenues in 2005. Barclays analyst Phoebe Tse said a high-profile corruption crackdown spearheaded by Chinese President Xi Jinping was one of the main factors that had pushed down the territory's casino earnings in 2014. "It has had a significant negative impact on VIP playing sentiment," she told AFP. Macau is the only part of China where casino gambling is legal, and the industry is dependent on big spenders from the mainland. But high-rollers have been reined in by the anti-graft drive, which has seen Xi vow to crack down on high-ranking officials -- described as "tigers" -- along with low-level "flies", in a campaign which includes curbing lavish spending. Shares of casino operators listed on the Hong Kong stock exchange tumbled Friday after the announcement with share prices in SJM Holdings falling over 2.5 percent and prices in Wynn Macau shares falling over 3.5 percent during afternoon trade. A slowdown in the mainland economy has also been taking its toll on casino earnings. - 'Period of consolidation' - Experts had predicted that growth in the VIP segment, accounting for two thirds of the total revenues of Macau's gaming industry, would be limited by the continued focus on corruption. Beijing is also reported to be clamping down on illicit funds channelled from the mainland through its casinos. Revenues hit a record $45 billion in 2013, official figures showed. Xi, on a visit to Macau earlier this month, said the territory should diversify away from casinos. "Macau is now entering into a period of consolidation," gaming expert Ben Lee of iGamiX told AFP. "Casinos will now have to turn to real marketing and operational efficiencies to drive profitability​," Macau-based Lee said, adding that Beijing is determined to rein in the sector's "uncontrolled growth". Lee predicted that the slowing trend will continue into the second quarter of next year until casinos open proposed expansions, which would stimulate the industry. Casino operators have plans to expand their operations on the Cotai Strip, a former swamp which is being reclaimed and transformed into mass market resorts. Macau overtook Las Vegas as the world's casino capital in terms of revenue after the sector was opened up to foreign competition in 2002, and now enjoys gambling revenues multiple times that of the American city.

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