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Macau Casino Hopes Brighten: Gaming Revenues Soar in May

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The worst seems to be over for casino operators in Macau, which is the world’s largest gambling hub. Macau Gross Gaming Revenues (GGR) increased in May for the fourth consecutive month. However, revenues surpassed the street estimates for the first time in the last four months.

Gaming revenues from Macau have jumped 492.2% in the month. The metric increased to 10.44 billion patacas ($1.3 billion) from 1.76 billion patacas a year ago. In February, March and April, GGR from the region increased 135.6%, 58% and 1,014.4%, respectively. Gaming revenues in May benefited from an increase in visitation from mainland China. Easing of coronavirus-related restrictions and the Golden Week holiday drove visitation.

Per the Macau Government Tourism Office, nearly 167,000 people visited Macau during the Golden Week holidays from May 1 to May 5. Average daily visitation during the five-day holiday jumped 158% in comparison with the Spring Festival in February and also rose 25% from the previous month. However, the figure is well below the pre-pandemic levels.

Increase in gaming revenues from Macau is likely to drive companies, including MGM Resorts International (MGM - Free Report) , Melco Resorts & Entertainment Limited (MLCO - Free Report) , Wynn Resorts, Limited (WYNN - Free Report) and Las Vegas Sands Corp. (LVS - Free Report) , which generate the majority of their revenues from the region.

So far this year, the Zacks Gaming industry has increased 20.3% compared with the S&P 500’s growth of 13.2%.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

What’s Next for the Industry?

Although visitation is likely to improve gradually in the coming months, it is expected to take time to reach the pre-pandemic levels. However, with an increased focus on streamlining cost structures along with optimization of business processes, the industry on a whole has shown some resilience.

Casino visitations in 2020 declined sharply due to lockdowns and other coronavirus-related restrictions. This gave an opportunity to casino operators to focus on online betting. Although majority of the casinos have reopened with safety protocols, gaming revenues are below the pre-pandemic levels. In such a scenario, companies are focusing more on iGaming business operations to generate online gambling revenues.

Per ResearchAndMarkets, the global online gambling market is likely to reach $97.69 billion, at a CAGR (2020-2025) of 11.31%. Growth in the gambling market is likely to be driven by an increase in smartphone adoption and improving internet infrastructure globally.

Per a Nielsen report, in first-quarter 2021, the online gambling industry, mainly sports betting, spent $154 million on local TV advertisements, up $10.7 million from the start of 2019. The spending is likely to increase as more states will allow online betting in the coming months. Some of the popular iGaming applications include DraftKings, Barstool, FanDuel, BetMGM, BetRivers, Fox Bet and BetMonarch. Markedly, the applications have been an important medium for gamers to connect, learn and inspire amid the stay-at-home restrictions.

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