China stimulus should boost Macau gaming

Recent stimulus measures from the Chinese central government are anticipated to enhance sentiment and positively influence Macau’s gaming outlook, according to insights from Seaport Research Partners.

In February, Macau’s casinos reported a gross gaming revenue (GGR) of MOP 19.74 billion (approximately £1.9 billion/€2.2 billion/US$2.47 billion). This marks a significant rebound from the downturns experienced in December and January, potentially signaling an upward momentum for the industry.

However, to align with government expectations of a total GGR of MOP 240 billion for the year, the industry must consistently generate monthly GGR of MOP 20 billion.

Given that the gaming sector historically accounts for about 80% of the government’s revenue, Macau’s chief executive, Sam Hou Fai, expressed caution regarding the fiscal outlook during a briefing on March 13 with Chinese government delegates. “The year’s economic forecasts may not be as favorable as anticipated,” he noted. “We need to approach the future economic landscape with prudence.”

Support from a stimulus package issued by Beijing may provide the much-needed boost.

Stimulus Should Facilitate Moderate Growth

Seaport Research Partners highlights that the measures presented at the governmental briefing aim to stimulate “income growth amid US tariffs,” building upon the stimulus and property market supports initiated in September. These strategies are expected to bolster consumer confidence and demand, subsequently enhancing Macau’s market in the medium term.

As of September 24, 2024, the Chinese central bank introduced a significant monetary stimulus package, labeled by Reuters as “the most aggressive since the COVID-19 pandemic.” This initiative encompasses an expansive MOP 10.88 trillion debt package, a projected increase in the budget deficit, extensive interest rate reductions, and looser monetary policies.

The commencement of relaxed travel restrictions for residents of Zhuhai on January 1 has further fueled a resurgence in tourism, adding momentum to the local economy.

Seaport analyst Vitaly Umansky forecasts a GGR growth of 6.7% for 2025, with mass market gaming expected to expand by 7%.

Investment firm Jefferies, which previously projected a yearly GGR of MOP 245 billion, recently adjusted this figure downward by 2% to MOP 240 billion. Nevertheless, this projection still reflects a year-on-year increase of 5.8% and aligns with conservative government expectations.

Preparing for Intensified Competition

In light of these challenges, Macau’s gaming operators are bracing for an influx of regional competition. Japan is set to unveil its first casino resort, MGM Osaka, in 2030. Meanwhile, Thailand is exploring plans to introduce its first lawful casinos by 2029. Also on the horizon is Wynn Resorts, which plans to launch the first casino resort in the United Arab Emirates in 2027.

In the recent March issue of Macau Business magazine, editorial director José Carlos Matias emphasizes the significance of these developments. He indicates that adhering to Macau’s “cherished integrated resorts model” will determine whether the region can maintain its status as a premier gaming-tourism hub in the years ahead or risk falling behind competitors.

While it is imperative to cultivate new and sustainable industries to support gaming establishments, Matias stresses that “enhancing our existing strengths” is crucial. He advocates for embedding targeted diversification efforts into the core business strategies of key industry players, which should yield pragmatic and measurable outcomes.

“Gaming and integrated resort operators are elevating their standards,” Matias points out, “and this is likely just the inception of transformative change within the industry.”