Melco Crown to Diversify After Macau Casinos Decline for 25th Straight Month
The historic decline for Macau casinos has continued for the 25th straight month, according data provided by the Gaming Inspection and Coordination Bureau, the city's gaming regulator.
Macau casinos reported 15.9 billion Macau Patacas (MOP) ($2 billion) in gross gaming revenue (GGR) in June 2016, its lowest total in almost six years when in September 2010 the city's casinos recorded MOP 15.3 billion ($1.9 billion) in GGR.
June's GGR also suffered a 8.5-percent year-over-year decline from the MOP 17.4 billion ($2.2 billion) in GGR recorded during June 2015 and a more substantial 13.5-percent decline from the MOP 18.4 billion in GGR recognized in May 2016.
When looking at the year-to-date figures, the situation isn't any rosier for Macau's casinos with the MOP 107.8 billion ($13.5 billion) in GGR recorded in the first six months of 2016 declining by 11.4 percent from the same period a year ago.
Crown Resorts Plans to Spin Off Its Macau Holdings
The declines are primarily blamed on less VIP gamblers attending Macau's casinos. A number of factors are believe to have contributed to the decline of this coveted market sector including China's President Xi Jinping launching an anti-graft campaign, casinos opening in other Asian countries, a ban on mobile phones, restrictions on China UnionPay Co Ltd transactions, currency devaluations, and the recent opening of Shanghai Disney Resort in mainland China. Some of these factors also affect the mass-market sector which casinos have been striving to gain to replace losses in the VIP sector.
One casino group recently reacted to the decline with Crown Resorts Ltd. announcing a spin off of its international holding which includes a $2 billion stake in the company's Melco Crown Entertainment Ltd.. Melco Crown operates five integrated casino resorts with four in Macau and one in the Philippines.
Bloomberg implied that the primary driver of the spin off is to enable the company's controller shareholder and billionaire James Packer "to shield his Australian assets from a prolonged downturn in the Chinese gambling hub."
*Exchange rates provided on a spot-basis by xe.com.
**Image courtesy of The Times.
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