Macau and Vegas on separate growth trajectories

While Macau’s gaming sector appears poised for long term recovery, the U.S. market will be seen trudging along with flat revenues, says Fitch Ratings.

“Macau gaming, now firmly at the bottom of the cycle, has better long-term prospects given investments in new supply, improvements in mass market indicators and under-penetration of gaming throughout the rest of Asia,” said Alex Bumazhny, senior director, U.S. Corporates.

“In the U.S. the operating environment for regional casinos is benign at best, but a bit brighter on the Strip.”

The ratings agency says it expects Macau gaming revenues to finish 2016 down 4 percent, before hitting mid-single digit growth in 2017.

In contrast, Fitch expects the U.S. market to see only flat revenues and a modest new gaming supply in 2017.

“With several years of major capex in the rearview mirror, many U.S. gaming companies will look to optimize their capital structures.” says Bumazhny.

“The traditional casino model faces a turning tide, partly cannibalized by video lottery terminals, social gaming and instant-ticket lottery, and constrained by secular demographic headwinds but buoyed by growing employment and median wages,” said Fitch.