Troubles Continue to Mount For Macau Casinos
Concerns continue to mount for the gaming industry in Macau, as for the seventeenth straight month, casinos in the city recorded a decline in monthly revenues when compared to the same month a year ago.
The Gross Gaming Revenue (GGR) of Macau's casinos declined by 28.4 percent from MOP 28.06 billion in October 2014 (approx. $3.5 billion) to MOP 20.06 billion (approx. $2.5 billion) in October 2015. While this is certainly troubling for Macau's casino industry, the news isn't all bad as this is the first time since January 2015 that the GGR decline has been under 30 percent.
While revenues fell in line with what some analysts predicted, others were anticipating a better month after October started off strongly due to China's week-long holiday, Golden Week.
Among those predicting a smaller decline were Deutsche Bank Securities Inc. analysts Carlo Santarelli and Danny Valoy, who initially estimated that Macau's casinos would witness a 27 percent decline in GGR in October year over year.
None of us are really clear on what our environment is going to be like going forward.
Melco Crown Opens Its $3.2 Billion Casino
Despite the heavy declines, Melco Crown Entertainment Ltd. opened its doors to its third casino in Macau. The long-anticipated $3.2 billion Hollywood-themed Studio City is located on the Cotai Strip hopes to attract a new wave of visitors with the 40,000 square-foot resort featuring Asia’s tallest Ferris wheel, 1,600 hotel rooms, a theater for magic shows, a 5,000-seat entertainment center, a TV production studio, and plenty of other family entertainment planned by both Melco and its partner in the project, Time Warner Inc.
This isn't the only new casino planned for Macau in the near future, as the Wynn Palace casino is scheduled to open in late March 2016. However, it appears the new casino is already experiencing its share of difficulties.
A couple weeks ago, Wynn Resorts Ltd. Chairman and CEO Steve Wynn complained about a lack of clarity in terms of table caps at the planned casino. "None of us are really clear on what our environment is going to be like going forward, and it makes planning and adjusting almost a mystical process," explained Wynn.
Wynn is planning for his second Macau-based casino to have approximately 500 table games; however, it is uncertain how many he will be allowed to have. This is obviously frustrating to Wynn from a planning perspective, and also seems to defy the concept of free-market competition.
"Here in America we would never have a Las Vegas of the diversity we’ve had if the city had told us how many tables we could spread," Wynn said. "The table cap is the single most counter-intuitive and irrational decision that was ever made."
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