Meltdown

They have to be thinking about selling now. Even if they get 50 cents on the dollar, it may mean less loss in the long run. Especially if they can't get tables.

You are talking about a -21.2% loss from Dec to Dec, but that's on top of a -30.4% loss from Dec to Dec last year. The most recent 12 months are 40% down from the best 12 months in a row. So as bad as the numbers are, there is also no indication of a plateau. How much worse could it be in six months?

Nothing in Atlantic City compares to a 40% drop in revenue in 19 months.
Atlantic City

-5.7% 2006-2007
-7.6% 2007-2008
-13.% 2008-2009
-9.6% 2009-2010
-7.0% 2010-2011
-8.0% 2011-2012
-6.2% 2012-2013
-4.5% 2013-2014
-47.4% 2006-2014 (8 year drop in gaming)


-7.1% 2014-2015 (first 11 months)
If you remove the discontinued operators and Taj Mahal from the mix, AC is up 5.3% from last year!

You have to wonder if it is a property grab. The Chinese government invited all these foreign firms, and then changed the rules. Perhaps they want Chinese firms to buy up all the foreign owned properties.

Why would you open a giant casino now in
Macao, when the present ones are struggling.
Here's a list of how many people the largest
casinos employ. The amount you have to earn
just to make payroll every week is staggering.

Top-10 largest casinos by number of employees

1.) Casino de Genting (Malaysia) – 13,000

2.) Foxwoods Resort Casino (Connecticut) – 10,220

3.) Mohegan Sun Casino (Connecticut) – 10,000

4.) Bellagio (Las Vegas) – 9,700

5.) MGM Grand (Las Vegas) – 9,000

T-6.) Mandalay Bay (Las Vegas) – 8,000

T-6.) Sands Macao (China) – 8,000

8.) Caesar's Palace (Las Vegas) – 7,500

9.) Borgata (Atlantic City) – 7,000

10.) Atlantis Resort and Casino (Bahamas) – 6,500

Quote: Evenbob

Why would you open a giant casino now in Macao, when the present ones are struggling.

June 2014 was the first downturn in gaming in Macao. I believe that previous efforts by the government to control corruption only resulted in slower growth,
At least initially, it didn't look so overwhelming.

These giant properties were well underway in June 2014. It wasn't until the last year that they probably wished that they had not begun the properties when the government announced a limitation on number of tables.

Year over Year drop in gaming revenue for 2014 in Macau
Jun -3.7%
Jul -3.6%
Aug -6.1%
Sept -11.7%
Oct -23.2%
Nov -19.6%
Dec -30.4%

Quote: Pacomartin

June 2014 was the first downturn in gaming in Macao. I believe that previous efforts by the government to control corruption only resulted in slower growth,
At least initially, it didn't look so overwhelming.

These giant properties were well underway in June 2014. It wasn't until the last year that they probably wished that they had not begun the properties when the government announced a limitation on number of tables.

Year over Year drop in gaming revenue for 2014 in Macau
Jun -3.7%
Jul -3.6%
Aug -6.1%
Sept -11.7%
Oct -23.2%
Nov -19.6%
Dec -30.4%

You're much better versed in the Macau details, but it seems to me that the government is making a purely political point (including philosophy of Chinese governance) with all their interference in the commerce. If they wanted to ride the whale, they'd just up their cut of doing business with those taking the money international (out of the Chinese economy), though I have to think that's mostly the profit margin, as nearly all the employees there must be Chinese. What are Wynn/Sands/Genting/whomever going to do? Move their multi-billion dollar stores? They're stuck.

Instead, the Chinese are full speed ahead, harpoons locked and loaded. Unless it's an extortion tactic to make the above happen (a "renegotiation", perhaps?) it has to be a show of strength and/or a lesson to their own people about gaming. Maybe restricted to a reaction to junketing tactics getting around currency restrictions at first, the table limits thing is just an attack on profitability. Ends up hurting the customer, because to open on 150 tables instead of 400 means the table mins have to go up, vig goes up, less people employed, I don't know what-all. I don't think any of those companies can simply walk away from those expensive buildings now that they're mostly finished, but maybe they mothball for now?

Quote: Evenbob

Why would you open a giant casino now in
Macao,

First, I think the ones opening soon were started before things got bad.

Second, previous tough talk about cracking down on corruption was mostly lip service. I don't think anybody expected China to be this serious about it.

Quote: beachbumbabs

You're much better versed in the Macau details, but it seems to me that the government is making a purely political point (including philosophy of Chinese governance) with all their interference in the commerce.

I don't know if there is a philosophy of Chinese governance in these matters any more than in American government

For instance the competition for a new Marine Corp One fleet of helicopters for the president was announced with a proposal request on 18 December 2003. The contract requires that the winner deliver the first of 23 helicopters in 2009. The end result was that for the first time in the history of presidential rotary wing transportation, the President of the United States’ primary helicopter will be that of an aircraft designed in Europe. Most people speculated that the $6.1 billion contract was given to Britain in reward for their cooperation in the Gulf War. Come 2009 we have a new president who says the old helicopters are just fine, and the government doesn't need to spend more for each of 23 helicopters than the cost of the modified B747's. You may agree that the project was overblown, but it is obvious an arrangement with a foreign ally was changed at the last minute.

In a similar manner the old Chinese president thought it would be a great thing if foreign gaming firms could bring Macao up from the backwoods and make it an international class destination. The new president wants to make anti-corruption the cornerstone of his presidency, so he is taking draconian measures to curtail gaming and any activities associated with it. They don't seem concerned with vice, but violation of money export laws.

One Paragraph History
In 1962, the government of Macau awarded the concession to Sociedade de Turismo e Diversões de Macao (STDM), a company that, under the leadership of Stanley Ho, would retain its monopoly on Macau casinos for the next forty years. The Macau government awarded three gambling permits in 2002, having become a worldwide center for gambling following the return of the “"special administrative region,” (SAR) along with Hong Kong, to China in 1999. Casino gambling remained legal in Macau, though it was and still is illegal in the PRC. The government opened up STDM's casino monopoly, which was set to expire in 2001, to new bidders. Three companies, SJM (a subsidiary of STDM), Wynn Resorts, and a combination of Galaxy Entertainment and Las Vegas Sands won concessions; when the SAR permitted Galaxy and Las Vegas Sands to split their concession, each of the other two concessionaires were allowed to sell sub-concessions. SJM sold its sub-concession to a partnership between Pansy Ho and MGM Mirage (now MGM Resorts), and Wynn Resorts sold its sub-concession to Melco PBL (now Melco Crown), a partnership between Melco and PBL, an Australian casino operator.

Quote: Wizard

First, I think the ones opening soon were started before things got bad.

Second, previous tough talk about cracking down on corruption was mostly lip service. I don't think anybody expected China to be this serious about it.

In 2008, China put visa restrictions in place, citing concerns of a rapid increase in the Macau gaming market. The restrictions immediately led to a slowdown in gaming revenues. Macau casinos saw just a 10 percent growth in revenues that year, down from 28 percent the year before. These restrictions may have been related to Xi Jinping beginning his term as vice president (Xi is the current president who is widely regarded as the primary motivator in the current restrictions).


The Republic of China is now on it's 7th 5 year presidential term of the 4th constitution (began 1983). The first two terms were served by separate presidents. All presidents were under paramount Leader, Deng Xiaoping, until his death on 19 February 1997.

Presidents of China during Macau's renaissance
Jiang Zemin (born 1926) 27 March 1993-15 March 2003
Hu Jintao (born 1942) 15 March 2003 -14 March 2013
Xi Jinping (born 1953) 14 March 2013-Incumbent : Served as Vice President (2008–2013).

The first 14 months of Xi's presidency, Macau was still growing in gaming revenue, but he brought down the hammer pretty hard after that. The second 19 months have been unrelentingly negative. At a minimum Xi will be president for 60 months. But the expectation is that Xi Jinping will win re-election in 2018 for a second five year term.



Dec 2010 18.883 billion patacas
Dec 2015 18.340 billion patacas

Accumulated Gross Revenue
2009 US$14.66 billion
2010 +57.8%
2011 +42.2%
2012 +13.5%
2013 +18.6%
2014 -2.6% (but up +15.8% for first 5 months)
2015 -34.3%

So going back to 2010 revenue is a big deal

As far as I know the Chinese leadership still consider themselves Communists. In Cuba, at least, the regime there takes it as a matter of being able to show their legitimacy, that they shut down the casinos. Is it possible that this is a general 'thing' with Communist regimes?

Quote: odiousgambit

Is it possible that this is a general 'thing' with Communist regimes?

I don't think so, as there is no shutdown of expensive luxuries like $300 hotel rooms or fancy dinners. It's just the VIP gaming that they object too.

Macau is now at 22 months of Year over Year negative change in gaming revenue. Last month was only -0.1% but March was -16% again. One expects a downturn to only last for no more than a year to 16 months. After that you are going down from numbers that are already down. But Macau seems like it will go over 24 months.

This still makes Atlantic City downturn look like a walk on the beach. Either that or it is the "higher you fly, the harder you fall". I've always found that saying annoying but sometimes it seems unavoidable.