Macau GGR unaffected by money exchange crackdown
Analysts indicate that recent arrests related to money exchange operations have not significantly impacted March’s revenue. Expectations for April remain flat.
In March, Macau’s casinos reported a modest 0.8% increase in gross gaming revenue (GGR), reaching 76.1% of the pre-pandemic figures from March 2019. This performance aligns with the revised expectations set by Seaport Research Partners.
According to analyst Vitaly Umansky, the recent arrests of multiple alleged illegal money-changers on March 25 have not led to material fluctuations in revenue. However, this crackdown could momentarily deter visitor numbers.
Implications of Illicit Cross-Border Money Transfers
Illegal money changers, referred to as “huanqiandang,” operate outside government regulations to facilitate capital movement for gamblers. Following a legislation change in October that criminalized these unlicensed transactions, authorities have emphasized their association with various criminal activities, including theft, fraud, illegal immigration, and even violent crimes.
Recent law enforcement operations led to the apprehension of 42 individuals, including key figures within the organized network. These offenders are believed to have facilitated cross-border transactions amounting to approximately HK$790 million (£78 million/€94 million/$101.5 million), garnering estimated profits of over HK$21 million.
Umansky suggests that while GGR in April may experience slight impacts due to the crackdown, this effect is expected to be minimal over the long term. “Some customers might avoid pawnshops, and others may postpone their trips to Macau in the short term,” he noted.
Jefferies Equity Research has also weighed in, predicting that sentiment and, consequently, GGR could see a short-term drop due to the arrests. However, analysts Anne Ling, David Katz, and Jingjue Pei maintain that the overall impact will likely be transitory and negligible concerning fundamental operations.
Flat April Projects Pave the Way for a Robust Second Half
The forecast from Seaport anticipates a slight 0.1% decline in year-on-year GGR for April, equating to a 5.8% decrease month-over-month, consistent with historical averages. However, Umansky projects a significant rebound in the latter half of the year, estimating a GGR increase of 10.9%, leading to an overall year-on-year rise of 6.5% by 2025.
“This growth is expected to be fueled by enhanced marketing strategies from operators and changing consumer behavior in China,” he explained. “Stimulus measures and revised economic policies in China are anticipated to elevate economic conditions and bolster consumer confidence later this year.”
The Jefferies team pointed out that March and April typically represent the lowest GGR months on the calendar. “A key indicator for future performance in Macau will be the results during the May public holiday,” they remarked.
The Labour Day Golden Week, occurring from May 1-5, consistently drives a notable increase in travel to Macau. For instance, in 2024, the region welcomed approximately 605,000 visitors, surpassing the total from 2023 but still trailing behind pre-pandemic levels recorded in 2019, as per the Macau Government Tourism Office.
