Macau has fallen

Macau is no longer the epicenter of casino gaming. The Macau dream is over - at least for the time being - after 18 spectacular years the likes of which the gaming world has never seen before and may never see again. IAG Vice Chairman and CEO Andrew W. Scott shares his thoughts on why Macau went wrong and whether the SAR can reclaim its throne. "The King is dead. The King is dead.

This phrase, steeped in history and tradition, was first proclaimed in 1422 after the death of French King Charles VI and the accession of his son Charles VII.

So it is high time for the global gambling industry to make such a declaration. The harsh reality is that Macau, the undisputed king since Las Vegas surpassed Macau in gross gaming revenue (GGR) in 2007, is no longer king. In the 30 months since the pandemic began, calendar-based gross gaming revenues have fluctuated between 3% and 43% of 2019 levels, averaging just 24% for the entire pandemic period.

At the same time, Nevada, a state widely thought to be incapable of a strong post-COVID recovery, has been churning out more than $1 billion in revenue every month since March 2021, with Las Vegas clearly accounting for the majority of that. This is roughly 50% above Macau's average for the entire pandemic period and Macau's most recent quarterly revenues. That's roughly triple the GGR for Q2 2022. Even traditionally much smaller jurisdictions, such as the Philippines, Singapore and Australia, have outperformed or matched Macau's performance in the latest quarters.

Macau's gambling company, probably an unparalleled historic company, was established by a wel l-known doctor Stanley Ho and had the interest of exclusive gambling in Macau from 1960 to 2000. After Macau was transferred from Portugal to China on December 20, 1999, the concession was extended to 2002, and then the industry was liberalized with the addition of Win Macau and Galaxy Entertainment, with three major operators in the industry. Born. Later, Venetian Macao (now Sands CHINA), MGM China, Melco-PBL (now Melco Resorts) was given a subconsition, and the three companies have expanded to six companies. Sands opened Sands Macau, the first facility near the Hong Kong Macau Ferry Terminal on the Macau Peninsula, on May 18, 2004. Two months later, the first Galaxy Casino opened opposite the Wald Hotel, and fresh and lively industries appeared.

2004 TO 2013

The next 10 years could only be called a miracle. The Macau Peninsula's Grand Lisboa, MGM Macau, Sands Macau, Star World, Win Macau, and Thai Pa Crown Macau (now Ultira). In Kotai, three larger proposals were City of Dreams, Galaxy Macau, and The Venetian Macau. The total gaming revenue (GGR) increased from 29 billion Macau Pataka ($ 3. 6 billion) in 2003, the last year of the monopoly, to 361 billion Macau Pataka ($ 45. 1 billion). It is still a record GGR in the United States. Macau This basically means that the annual average growth rate (CAGR) was a tremendous number of 28, 7 %, and the global recession in 2007 and 2008 is 10. Don't forget that it started in the year.

In the next six years, the first headwind blew, and it was slightly different from the exhilaration of the past 10 years.

2014 TO 2019

In 2014, Macau's liberalized industry GGR decreased for the first time. Of course, this was only a 2. 5 % decrease, but it still shocked the annual growth rate that lasted 10 years. In 2010, he offset the "depression" in 2009).

Interestingly, the 2014 hitch was blamed for the World Cup in Brazil in many years. Gamblers were hoped to maintain their homes four years later to arrange bets at the World Soccer Festival. The doctrine was completely argued in 2015, for example, in 2015, when the "suppression of corruption" actually collapsed to Macau and a decrease of 34 % compared to the previous year. Correspondence of corruption began a few years ago, but it took time to increase momentum and affect Macau. A stronger wound received by the VIP-sector.

But in 2018, the industry has expanded its storm, and GGR actually returned to $ 303 billion ($ 37, $ 37 billion) within 84 % of the peak of 2013. In 2019, the volume of 292 billion Macau Patakador ($ 365 billion) has not paid attention to the fact that GGR fell 3 or 6 % from the previous year, but it is actually stable. With the steep stages of rising rising, which could be done, it is now in a new stage of maturity, which is characterized by a specific annual increase rate.

Win Macau Limited opened a private Win Palace Resort in Kotai in 2016.

No one on the green earth of God had no opportunity to imagine that the failure was waiting for us where the horns actually turned.

Cobid was timing for so many speakers on printing publications, magazines, and sites. In late January of 2020, COVID-19, which exploded in Macau, like a meteorite that destroyed the dinosaurs, closed all Macau casinos from February 5 to 2020. It caused a target and absolutely unprecedented situation. This was the first global closure case in the whole world population. However, a terrible 1 5-day financial zero mark is a series of lon g-term slides closing and travel restrictions, which has almost uncomfortable effects on visiting major cities in China.

2020 TO TODAY: THE COVID CRISIS

From the 2019 GGR indicators, Macau's $ 292 billion ($ 36, $ 5 billion) fell 80 % compared to the previous year, and in 2020 it was $ 60 billion ($ 7. 5 billion). In 2021, we realized that we were out of improvemen t-it was actually only 30 % of the 2019 values ​​to mop up $ 87 billion ($ 10 and 9 billion). However, the first phase of the mi d-2022 was worse than the past two years: the increase in income was only 26 billion MOPS. $ 3 billion ($ 3 billion), and in fact, only 18 % of the 2019 values. Is acquired. It was a half-year non-plant in two or five years, from January 2020 to June 2022, under the influence of the pandemic.

And as one of these times, when we thought it would actually be even more frightening, for example, it happened. The last quarter, Q2 2022, was a negligible 12% of 2019, and July (at the time of writing, it has not yet ended) has the potential to be a month that has not gelled and frozen since the beginning of the pandemic: strictly borderline has been in force in the first 10 days of the month, and since July 11, the absolute closure of casinos began. According to my guess, July has the potential to compile within 2% of the average monthly indicators of 2019 - close to financial zero.

For two or five years, we ask once a day what: "When will everything return to normal?" Say, and every time there was ever an answer from the "experts", in what quantity, from you, what - "in the right year", "after three quarters" or "Of course, for example, it can no longer be sustained" options on the subject.

THERE IS NO NORMAL COMING

But these are not counting speculations, assumptions, beliefs, just mediocrity based on nothing. Frosty, strict, everything is not the fact that the financial zero into which Macau is falling is not the end. I am not going to prophesy when Macau will be "normal" again. In fact, whoever speaks, what does it mean, actually understands, but is lying. Nobody understands. Last November, the CEO of Macau pretended that GGR will be $130 billion MOPA by 2022. The CEO of Macau pretended last November that GGR will be $130 billion MOPA by 2022.

Sad moment: workers, by the resolution, the Chief Executive of Macau, close the Lisboa-Casino on July 11.

This amount is absolutely possible to show this third part, or even less! It is time to end the wolf to the wolf. I believe we will never see the "normal" state the fastest - especially if you perceive the 2019 grade below "normal".

In mid-July, three US operators with operations in Macau stood side by side in an interview with CNBC. Rob Goldstein, chairman and general manager of Las Vegas Sands, Bill Hornbackel, general manager of MGM Resorts, and Craig Billings, general manager of Wynn Resorts, boldly announced that Macau was in fact returning to its former popularity.

"I find it funny that people are even hesitant to bring Macau back," Goldstein said, "Obviously it's been a difficult few years, definitely... This is a difficult time. Essentially, we need to hang on to the ground and wait for everything to change. But it's pretty hard to convince yourself that he's not actually turning around. If that happens, Macau will start lending money again. Because at its peak, it made $3. 5 billion. You understand that at its peak, it made $3. 5 billion.

Macau was 7 to 8 times (of Las Vegas). Macau was 7 to 8 times (of Las Vegas). Macau is the world's largest gambling market and will continue to be so. "

Usually, the lively western entrance of Venetian Macau became like a ghost town after the Macau casino was ordered to close.

If you can't predict what will happen in Macau in Macau, and you don't know if Macau will be closed a week later, you can see where and what happens where you are. Is it? I'm sorry-I have fully respect the three units, but they turned out between the hammer and the gravity. They invested tens of billions of dollars and got Macau's immovable bricks and ground solutions. During the catastrophe in Cobid, Concecornia has increased debt from $ 5 billion to $ 20 billion. And in the next few months they will repeat the bidding. In such a situation, the commitment to Macau has to be reconfirmed, act as a support organization, and guarantees everyone that "a good era will come again." Otherwise, the Macau government and the World Investment Community will send a signal that could destroy their business.

Macau's sign always warns the citizens of the need for masks, vaccinations, and social distance.

It has long been proven that Macau's simultaneous occurrence in Macau is a state of Macau's economic zero.

MACAU KILLER NUMBER 1: COVID-ZERO

While other areas of the world learn coexistence with viruses, the mainland China has a strict "Cobid-Zero" approach. And the mainland China leads, and Macau follows it. This is largely due to the political humility for the Macau government, but for some realistic reasons. Traditionally, Macau has a commercial pressure of having to follow the dominant market approach because it depends on the mainland of about 60 % of the number of visitors and about 90 % of sales.

Macau, which has a population of 700, 000 or less, is only acne compared to the mainland of 1. 4 billion in China, and the mainland is a good country with a lon g-time state from the 2000s to 2010s. 。 Therefore, Macau for IoT is not involved in the decisio n-making process to alleviate Cov y-Zero's policy.

These nations, such as the other areas of the Philippines, Singapore, Australia and Asi a-Pacific Rasal, have revealed their own faces and leave the past Cobid, including the boom of travel for money, but China's politics The target person "Kobid-Zero" has not seen the end of it. China and the two belt zones, Hong Kong and Macau, are becoming more and more confused in the eyes of the world as a huge outsider.

Despite all the killing of the story, if only Cobid kills Macau, it is rational to imagine Cobid restoration Macau, as it regulates almost all other jurisdictions by Las Vegas. It would be wrong to overthrow from the throne of the special administrative district as a king of casino gambling as a king of casino gambling. However, there is a second group of the moment that keeps squeezing Macau for a long time so that a specific number of hidden specific numbers is rea l-time, the COVID is completed and dusty for a long time.

MACAU KILLER NUMBER 2: CHINA’S POSTURE TOWARD MACAU

Casino gambling is prohibited in mainland China. Casino gambling is prohibited in mainland China and is despised as a harm of society. In Macau on mainland China, casino gambling is only acceptable for historical background strength. Since the mi d-19th century, casino gambling has been a legal image, and for centuries, Macau's de facto, major cultural personality.

In addition to the ideology background (in mainland China, I must not forget that ideology is always prioritized over money), this disgust is the true individual of the past Macau, who absolutely destroys China. Justified nearby. In fact, it is well known that the Casino Macau factory was used as a main means of escaping from China, especially in the wealthy of China, especially in the 2010s, mainly in the junky. With the rise between the two major countries between the past five and ten years, the fact that $ 1 billion in the United States is out of the United States via a US operator is definitely a bitter tablet that should be swallowed. be. These benefits were gained by playing at the casino of the mainland of China, and as a result, China accepts it as a form that converts its wealth into a wealth of geopolitical enemies. China often calls "gambling crimes" as public evil, and is undoubtedly resentful of the increase in gambling on the mainland country exported from Macau.

Popular days: The main gaming hall of the Venetian Macau Hotel before the appearance of Cobid.

Hostility towards the gambling business in Macau is expressed in various forms, from the mainland and, as an indirect confirmation, from the Macau government, no longer closed. One of them is the absolute abolition of Macau's VIP industry until the end of 2021; not allowing again the electric design of visas for Macau guests from the mainland. Yet another cause is the severe restrictions of the Chinese immigration authorities on travel for the purpose of gambling. Recently, mainland players who participate in Macau have been questioned by mainland officials on the ground about their travel to Macau and sources of funds.

The mainland is exhausted by deprivation, so that Macau diversifies its economy and gives up gambling. But this will hardly succeed - the task of not consuming for Macau is to take into account the situation, the resources of the soil (we will postpone the issue of the Hangjin Peninsula for another day, this includes the private personal number of the problem), the public and its capabilities, and also the absolute accessibility of the SAR, which does not offer casino gambling on its territory, something of a financial comparative advantage. A uniformly controversial exception to this criterion is the idea of ​​Macau serving as a gateway for Lusophone trade with China, but this proposal has certain problems in terms of size and infrastructure. More simply, Macau is not Hong Kong.

The neighborhood with Hanshin may help determine Macau's limited hotel room supply.

The Macau government will make many changes to the new gambling business law in late 2021 and early 2022, adopted by the Macau Legislative Assembly in June. While the numerous configurations were all negative for concessionaires, there is one controversial exception - the changes to satellite casinos. This site does not allow detailed comments, but certain readers will become familiar with the dozens of thousands published by IAG about the brand new law and its negative impact on 6 operators.

As the system has passed 50 years, the "one country two system" system has been approaching a milestone of 25 %. For example, some arguments want the centralized digital people under the centralized government and want Macau players to bet on this currency. It seems that there is a possibility sooner or later, but if this is realized, the main funds for each bet in Macau will be subject to state registration. There is such a sentence in the notebook of the IAG June issue that I recently provided. It was written by Andrew McDonald's and the late Bill Edinton and is written:

"Nobody understands what Beijing is thinking in the long term, and what measures are being taken to suppress Macau's rising and financial momentum.

You can see how these sentences were predictive.

Macau has been rejected by the king of the world's gambling industry by this declaration, but Macau has the power to recapture the throne. If COVID is finally left behind, it means the end of Macau's first murderer. However, Macau's second murderer, China, will be with us for years, unless China has changed its arrangement. Macau's only options are focused on the supply of the VIP industry, the strict crackdown on all Chinese gamblers, and the strict execution of China's $ 50, 000 per year for funds to withdraw by the people outside the Chinese continent. It will move mainly to the group market along Las Vegas.

CAN MACAU EVER RECLAIM ITS CROWN?

Under these circumstances, infrastructure, such as Macau's hotel rooms, public transportation, and immigration management, is not enough to maintain GGR at a level that approaches the tremendous height of 2013 and 2019. Of course, Yokoto has the ability to support the number of guest rooms in the hotel, but it takes many years to implement these experiences between Guangdong and Macau, although all of these experiences are possible. Based on this scenario, in an environment where the most blessed living conditions and an environment where microorganisms are difficult to approach, Macau has maintained the GGR of $ 100 billion per month at most, and only on e-third of the year. I guess I can't maintain it. As a result, Macau will be on the shoulder with Las Vegas, which steadily records similar GGRs. Of course, for example, EBITDA does not collapse, given that the margin of the lost VIP play is remarkably low, and in this scenario, EBITDA can ultimately recover to about tw o-thirds of the 2019 price. There i s-If you keep in mind that this is actually a generous estimate.

As you can see in the next few years whether Macau can accomplish this, my advice is not expected!