Macau suffers First Revenue Decrease Ever in 2014

Macau is still far and away the most-successful casino destination in the world, having earned 351.5 billion patacas ($44 billion) in 2014. However, the bad news is that, for the first time since 2002, Macau gambling revenue has declined, experiencing a 2.6% drop from the previous year.

This is the first time that Macau has experienced a full-year revenue decrease since public accounting of this information became available in 2002. A dismal December ensured that Macau would experience a drop, when the Asian gambling destination earned 23.29 billion patacas ($2.92 billion) – a 30% decrease from the previous December. The slide continued for the last seven months of 2014.

The slide has really hurt some of Macau’s biggest casino operators, Sands China shares fell 40% in 2014 while Galaxy stocks dropped 37%. Overall, the former Portuguese colony saw its casino operators’ stocks fall by an average of 40%.

The big culprit for Macau’s fall this past year is a Chinese government crackdown on political corruption and money laundering in the region. This has really hurt Macau’s high roller business, since many wealthy gamblers are choosing to stay away from the gambling hub during the crackdown.

So when will things get better for Macau? Nobody in the industry seems to know when, but Wynn Resorts CEO Steve Wynn does believe that things will turn around, as the Wall Street Journal reports with the following:

Wynn Resorts Ltd. chief Steve Wynn , who has long lauded what he deemed predictable government policies in China, said on an October earnings call that the antigraft campaign had “put a lot of the wealthy businessmen in the foxholes” and that he was unsure how long the policies would affect Macau. “I don’t know whether it is a squall or we are in the rainy season or how long it will last, but we are still very, very bullish on Macau,” he told listeners on the call.”

Aside from the government crackdown, another factor holding Macau back is their lack of diversification from gambling activities. Unlike Las Vegas, they’ve mainly focused on gambling while their fine dining, nightclubs, shopping and other activities lag behind. But in recent months, the Chinese government has been putting more pressure on Macau to diversify. And the local governing officials are taking major steps recently to comply with China’s wishes.