Casino stocks in Macau increased in June on the strength of a surge in gaming revenue. The Street reports that Macau’s gaming revenue for June increased by 5.9%, which translates to $2.95 billion (₹203 billion). The result of this increase in profit was a rise in the share prices of casinos in the region. Shares of Las Vegas Sands (LVS) increased by 4.5% to $61.74 (₹4,246) on the first trading day of July. MGM Resorts (MGM) shares increased by 0.95% to $28.84 (₹1,983). Also share for Wynn Resorts (WYNN) rose by 6.7% to $132.32 (₹9,099).
Casino Stocks Increase as Macau Gaming Revenue Surges
Macau is having a strong 2019
June’s revenue surge made it two strong months in a row for the Las Vegas of Asia. Macau’s gaming revenue had reached $3.21 billion (₹221 billion) in May despite analysts expecting a 4% year-on-year drop. This expectation was due to less demand from high rollers on account of China’s economic slowdown, a weaker Yuan, the lingering threat of the US-China trade war, and Beijing’s push to rebrand Macau as a non-gaming destination. Instead, the opposite was true and there was an influx of visitors from Mainland China, which caused revenues to increase. This two-month surge and the robust forecasts for July was welcome news for shareholders after a drop in stock value happened this time last year.
In 2018 gaming revenue in Macau increased by 12.5%, but was still well short of the expected 17–21% revenue jump for June. As a result, shares of Wynn, Las Vegas Sands, and MGM declined by 7.89%, 6.67%, and 3% respectively. While shareholders will be happy with the increase in stock value this year, they must also be concerned that 2019 could be one of the last strong years for Macau
Challenging the Las Vegas of Asia
Macau has greatly benefitted from having lenient laws on gaming. This is opposed to many of its Asian neighbors, which have some of the strictest in the world. An ExpatBets’ guide to Thai sports betting details how most forms of wagering are banned in the country. The only forms allowed are betting on the state-run national lottery and horse racing. This dynamic is prevalent in Asia, with India and Vietnam also having very restrictive gambling laws that limit the number of casinos allowed to operate. Cambodia is even stricter, they have banned all forms of gambling. As a result, Macau has been able to position itself as the region’s top destination for casino gaming.
But that standing is being challenged. The Philippines is now becoming a favored destination of high rollers, particularly from China. In the future, there will be further competition from Japan, which has recently legalized casino resorts. The cities of Osaka and Wakayama are stepping up their bids to be the first to build integrated casino resorts in the country. Tomakomai, Hokkaido, and Sasebo have also expressed the same interest. While it is unclear how much this will affect Macau, as the majority of its visitors are Chinese, shareholders will be watching to see how this development affects the number of international visits to the city.
Still number 1 in Asia
For all the challenges Macau is facing, including future competition, it is still the largest casino market in the world. The future prospects of Macau continue to look bright with Bloomberg reporting that Wynn Resorts Ltd. plans to invest $2 billion (₹137 billion) in property development. This should also have a positive impact on the region’s casino stocks.