acau casinos returned to growth in May, but the small revenue gain shows the region still faces headwinds from regional competition, softer demand from high rollers amid a slowdown in the world’s No.2 economy and a Sino-U.S. trade war continued to keep a lid on gains. Gross gaming revenue for Macau casino operators was 26 billion patacas (USD 3.21 billion) in May, the highest this year and up 1.8% from a year earlier, according to data from the Gaming Inspection & Coordination Bureau.
That was slightly worse than the median analyst estimate of a 3% increase, and follows declines in March and April. Accumulated revenue from January fell 1.6% to 125.7 billion patacas (USD 15.56 B), Bloomberg reports.
Despite May’s gains, a full recovery remains elusive for Macau’s casinos. A slowing Chinese economy, a weaker yuan and trade war had an impact over the territory this year, ending more than two years of uninterrupted revenue growth as the high-roller segment has weakened.
The stagnant results reinforce another trend that is worrying analysts: many high rollers are being lured away by attractive rival gaming spots. Suncity Group’s planned opening of a Vietnam resort, and Melco Resorts & Entertainment’s deal with Crown Resorts attest to the growing significance of regional diversification.
As the trade war with the U.S. drags on, analysts aren’t optimistic for the rest of the year. While the mass-market segment has shown some strength, analysts still forecast an overall drop in revenue for the full year, citing geopolitical uncertainty.
Macau casino stocks have been dropping amid the more pessimistic outlook. The Bloomberg Intelligence index of Macau casino stocks slid 20% in May, for the biggest monthly decline since September 2015. The worst performer was Wynn Macau Ltd., off 26%. For the year, the industry gauge is up 3.2%.
For operators in China’s only legal casino hub, the outlook remains challenging as Beijing pushes to rebrand Macau as a family-friendly destination. They are plowing about USD 10 billion into mostly non-gaming attractions before their licenses expire in 2022 amid warnings new permits will be linked to efforts to diversify.