Crackdown on unlawful money exchanges adds to Macau’s GGR summer decline

Macau’s Gaming Industry Faces Revenue Shortfall Amid Tourist Decline and Economic Uncertainty

Expected Revenue Miss

Macau’s gaming industry is anticipated to miss its revenue targets for July due to lower tourist demand, a crackdown on illegal money exchanges, and economic uncertainty in China. Analysts from JPMorgan forecast the city’s casinos to generate MOP18.5 billion (€2.1bn/£1.73bn/$2.25bn) in gross gaming revenue (GGR) for the month, slightly below the MOP19 billion projected.

June Performance and Seasonal Trends

June also saw a revenue shortfall, with GGR up 16.4% from 2023 but falling short of the 17.5% median analyst estimate and remaining 25.7% below pre-COVID levels. This mid-summer slump is typical, following the surge of Chinese tourists during the spring Golden Week holiday in May, leading to what Citigroup described as a “seasonal trough” in Macau GGR.

Crackdown on Illegal Money Exchanges

This year, the government’s crackdown on illegal money exchanges has added to the revenue challenges. Initiated in June, the campaign aims to curb capital flight and loan sharking, as well as to limit the amount of mainland currency Chinese tourists can bring over the border.

Chen Shiqu of China’s ministry of public security noted that “money exchange gangs” around casinos illegally supply gamblers with large amounts of Hong Kong dollars, the primary currency used in Macau’s casinos.

Analyst and Expert Insights

Citi analysts believe concerns over illegal money changers are exaggerated, noting that most players have legitimate means to transfer funds to Macau. Ben Lee of IGamiX Management and Consulting pointed out that with casinos offering currency exchange, the demand for illegal money changers likely stems from the need to transfer money across the border, which is a significant concern for Beijing.

Impact on VIP and Premium Players

VIP and premium players, who gamble amounts exceeding the permissible cross-border currency limits, are expected to be the most affected by the crackdown. Some mass-market players, especially those needing funds beyond daily ATM limits, will also feel the impact.

Hoffman Ma of Success Universe Group Ltd. indicated that mass-market players are most likely to be affected, as high-net-worth individuals usually have established funding channels. Lee concluded that increased scrutiny of financial transactions would lead to short-term declines in gaming revenue.