Outlook Dim For Macau Gambling (update)

Ratings agency lowers its forecast on gaming revenue growth

The challenges facing Macau's gambling industry, notably the Chinese central government crackdown on corruption, international competition for VIP punters and possible visa restrictions, together with the falling revenues in the offshore gambling mecca, have prompted the Fitch ratings agency to revise its forecast for revenue growth this year.
The agency has revised downwards its forecast from negative 4 percent to negative 22 percent in the wake of the latest numbers from Macau, which indicated that in February revenues were down 49 percent year-on-year and 18 percent month-over-month.
The Fitch advisory observed:
"We believe some VIP play is shifting to other jurisdictions that are under less political oversight and may offer better credit and/or commission terms. VIP volume increased 74 percent in 2H14 at Echo's and Crown's properties in Australia. Echo disclosed that its credit extensions increased 124 percent at its Sydney property in that quarter. NagaWorld in Cambodia grew its VIP volume in 2H14 by 47 percent. Much of the growth came from China."
Despite the rather gloomy present, Fitch is more upbeat about the long-term future of the industry in Macau, observing:
"We estimate that GDP per table game is about $2 billion across all APAC countries, or roughly $300 million per table position assuming six positions per table. And, continued GDP expansion in the region and improving transportation infrastructure should support the gaming supply over the next several years."

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