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Here's Why Macau Gaming Revenues Declined in June

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Macau, the world’s largest gambling hub, has witnessed month over month decline in casino Gross Gaming Revenues (GGR) in June. Notably, revenues declined in June after witnessing month over month increase in the trailing three quarters.

Gaming revenues from Macau decreased to $6.54 billion patacas ($817 million) this June compared with $10.4 billion patacas a year ago. However, the June’s figure soared 812.5% year over year. Meanwhile, Macau Gross Gaming Revenues for the first six months of 2021 amounted to $49 billion patacas, up 45.4% year over year.

The sequential decline in June was primarily due to coronavirus outbreak in Guangdong Province, which resulted in border restrictions and compulsory quarantine rules for visitors arriving from parts of Shenzhen, Guangzhou and Foshan.

Sequential decline in gaming revenues from Macau is likely to hurt 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 122% compared with the S&P 500’s growth of 16.4%.

Although visitation is likely to improve gradually in the coming months, it is expected to take time to attain 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.

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.

Zacks Investment ResearchImage Source: Zacks Investment Research

Macau Strengthens Casino Rules

Macau Gaming Inspection and Coordination Bureau (“DICJ”) has increased gaming inspectors by more than double. The number of inspectors increased to 459 from 192. In the recent years, Macau has stiffened scrutiny of casinos to crackdown on corruption in China. This compelled Macau officials to impose restrictions on high rollers to stop billions of dollars from being siphoned off illegally from mainland China to Macau.

Earlier, the government had put withdrawal limit on each ATM transaction to stem the recent increase in overseas ATM withdrawals. While these policies might be helpful in the long run, they are likely to restrict gaming revenues in the near term. Moreover, Macau's DICJ is increasing its audits of the junket industry due to worries of money laundering. Markedly, junkets are responsible for about half the gaming revenue in Macau.

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