Macau CEO predicts GGR slump to continue

Macau’s CEO Fernando Chui-Sai On warned of a further decline in gross gambling revenue for Macau in 2016, but proposed no measures to counter the slump in his annual policy address.

He estimated GGR of MOP200 billion ($25 billion), or about MOP16 billion a month, for next year, a sharp decline from the MOP351.5 billion posted for 2014. In October this year, revenue fell to MOP20.06 billion, down from MOP28.03 billion a year earlier.

“The gaming revenue drop will continue for some time, but that won’t affect the population’s lives,” local media cited him as saying. Chui added his estimates were conservative.

For November, Sterne Agee is forecasting a drop of 34 percent to MOP16.1 billion.

“Given the Macau Studio City opening October 27, we believe investors will find market GGR trends disappointing,” analyst David Bain said in a note.

In his address, Chui said the government would encourage gaming operators to engage more in large-scale tourism projects that would help diversify the sector by offering more leisure activities and non-gaming elements.

The government will also continue to upgrade infrastructure and will evaluate the capacity for receiving tourists to ensure overcrowding doesn’t impact local lives.

 The direction of policy is to explore ways of diversifying international source markets for the city’s tourists, to promote further the Historic Centre of Macao, and to ensure Macao is marketed via multi destination international travel packages.

Macau’s gross domestic product shrank 26.4 percent in the second quarter, hit by the falling revenue from the territory’s casinos, which have been affected by a crackdown on corruption in mainland China.

However, despite the predictions for a further decline, Chui said he would not cut social welfare spending.

A temporary food allowance for poor families will become permanent and will be increased to 40 patacas from 38 patacas a day. Permanent residents will get 9,000 patacas and non- permanent residents 5,400 patacas similar to amounts they received in July.