HONG KONG: Gambling revenue in Macau dropped 35.5% in August from a year earlier, sliding for 15 months in a row - more evidence of a deepening downturn that prompted the territory's government to announce on Tuesday it would tighten fiscal spending.
Casino revenues in the world's biggest gambling hub tumbled to 18.6 billion patacas (US$2.3 billion), as China's slowing economic growth has exacerbated a gambling slump caused by a broader crackdown on conspicuous spending.
The drop was not far off analysts' forecasts of a 36%-38% decline and was steeper than July's fall of 34.5%, also to 18.6 billion patacas.
The figures come on the heels of data showing Macau's economy, which relies on the territory's 36 casinos for over 80% of tax revenues, shrunk 26.4% in the second quarter - its third straight quarter of double-digit declines.
Macau's government announced that all public sector expenditure will be subject to "austerity measures" including the freezing of a certain percentage of assets and services included in the annual budget.
A new pact between Macau and China's central bank to fight money laundering and a planned crackdown on underground banking could also weaken sentiment that has been fragile since Beijing began a broad fight against corruption last year.
Macau's VIP segment has been hit the hardest with several high stakes parlours closing down, local executives say.
A potential broadening of a ban on smoking to include VIP lounges, as well as delays in infrastructure and growing competition from other casino locales are clouding the near-term outlook for gaming stocks. These include Sands China, Wynn Macau, Galaxy Entertainment, SJM Holdings, Melco Entertainment and MGM China .
But even with the slump, China's only legal gambling hub still rakes in more than five times the revenue of Las Vegas.
Analysts expect revenue to improve in second half of the year with the opening of Melco's movie-themed Studio City resort on Oct 27 and remain optimistic about the territory's long-term prospects, noting that just 2%-3% of China's 1.4 billion population has visited Macau.
Shares of Hong Kong-listed casino operators were down between 2% and 4% ahead of the middday break. They have lost some 32%-45% since the start of the year, underperforming the benchmark Hang Seng Index which has fallen 9% in the same period. - Reuters
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