Macau Casinos gaming industry is bracing for a potential slowdown in July due to intensified efforts by Chinese authorities to combat illegal money exchange activities.
According to Macau news sources, analysts from Morgan Stanley, including Praveen K. Choudhary, Gareth Leung, and Stephen W. Grambling, have predicted that the second quarter will likely see the first negative quarter-on-quarter growth in both industry mass gross gaming revenue (GGR) and corporate EBITDA since the post-COVID-19 reopening.
The analysts forecast a 2% quarter-on-quarter decline in mass GGR, which is expected to reach 113% of 2019 levels. Additionally, corporate EBITDA is anticipated to decrease by 7% quarter-on-quarter, reaching 80% of pre-pandemic levels.
The slowdown is attributed to the crackdown on illegal money exchange operations, combined with weaker macroeconomic conditions, consumption, and retail sales in China. These factors are expected to persist into the third quarter and continue impacting the Macau market.
Furthermore, the brokerage firm noted that the fourth-quarter results might also be negatively influenced by the anticipated visit of China’s President Xi Jinping to celebrate the 25th anniversary of Macau’s handover to China.
Macau authorities are tackling crime on multiple fronts, including casino fraud and cross-border illegal gambling syndicates. During a recent anti-crime operation, nearly 300 people were detained for investigation, and seven individuals were charged. Macau police also uncovered an illegal mahjong operation around Av. Marginal do Lam Mau, resulting in four arrests.
Despite these challenges, analysts remain optimistic that the combined EBITDA margins for Macau’s six largest gaming concessionaires will stay robust from June onwards.
Illegal gambling syndicates in Macau will be eliminated and the profitability of legal casinos will increase significantly