Macau’s Casinos to Suffer from Slowdown in the Economy?

Galaxy Macau CasinoMacau, a Special Administrative Region, is the only part of China where players can legally gamble in casinos. In 2011 gaming revenue in Macau was over 34 billion dollars. For some years now Macau has outstripped Las Vegas as the world’s gaming capital and its gambling revenue is said to be about five times that of Las Vegas. The spectacular growth in the Macau gambling market can be explained by the huge numbers of mainland Chinese visitors who come to Macau (See article: Hong Kong players rush to Macau casinos).
While there have been reports of a slowdown in the Chinese economy and the knock on effect this would have on Macau’s casinos, a resulting slowdown in Macau’s own economy is the subject of much debate. Some analysts predict that while growth in Macau was extremely strong in 2011 with a 21 percent increase in Gross domestic Product and casino revenue growing to 41 percent, that this level of growth cannot be sustained in the light of the worldwide economic crisis and in particular the slowdown in China. On the other hand it is said that casino revenue continues to grow with a 3.3 billion dollar casino income for May 2012, an increase of 7.3 percent when compared to 2011. The economic crisis in Europe has impacted on China’s export market causing the Chinese government to announce a Gross Domestic Product growth rate of 7.5 percent for 2012. This economic situation in China has impacted on the casino revenue in Macau as Chinese gamblers have less disposable income to spend in casinos. While it is hoped growth will return in 2013 some analysts have lowered earlier predictions and now believe that there will be about 10 percent growth next year in Macau.While the economists are predicting a slowdown, investors continue to have faith in Macau’s casino industry. The major casino groups in  Las Vegas have all invested in Macau and with the recent development of a new tourism, casino and leisure hub on the strip of land in Macau known as Cotai, investment continues. Along with Stanley Ho’s SJM Holdings, groups from Las Vegas such as MGM Grand, Las Vegas Sands and Wynn Resorts have all built extremely large, luxurious casinos in Macau.

Recently Steve Wynn, the Chairman and CEO of Wynn Resorts and Wynn Macau announced the building of his 4 billion dollar casino on Cotai to be finished in 2015 to 2016. He believes the casino market in Macau will continue to grow at a more steady rate since “The economic growth of China has been so spectacular, so dramatic, it would be unrealistic to continue growing at that rate” . His new casino resort will include a casino, hotels, retail outlets, theatres, restaurants and a nightclub.

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