Macau Casino Revenue could Hit $53 Billion by 2022

Macau’s casino revenue is on an upswing. And analysts predict that this amount could reach a record US$53 billion by 2022. Morgan Stanley analyzed Macau’s gambling market in a report called “Macau 2022 – Power of Compounding.” Their key takeaway is that the Chinese administrative area’s investment in infrastructure, rising spending growth, and visitation will […]

Macau’s casino revenue is on an upswing. And analysts predict that this amount could reach a record US$53 billion by 2022.

Morgan Stanley analyzed Macau’s gambling market in a report called “Macau 2022 – Power of Compounding.”

Their key takeaway is that the Chinese administrative area’s investment in infrastructure, rising spending growth, and visitation will fuel the casino hub’s growth.

Here’s an excerpt from the report:

“We think the quality of growth will be better, as more than 80 percent of the forecast profit should come from the mass market segment. Starting in 2018, we expect to see game-changer infrastructure developments with respect to HK-Zhuhai-Macao Bridge and Hengqin. We also think that by 2022, there will be clarity around license renewal, development capex and infrastructure ramp.”

“However, our long-term valuation could come down if there is either a one-time payment or increase in tax for the license renewal.”

Macau Shows Promise in 2017

Macau set a record for annual casino revenue with over US$43 billion in 2014. But China instituted a crackdown on criminal and government corruption the following year.

This reduced a lot of high rollers’ confidence in visiting the world’s biggest casino destination. However, 2017 showed that this confidence is being restored as the anti-corruption campaign winds down.

Morgan Stanley predicts that Macau will close out 2017 with somewhere between $33 billion and $34 billion in revenue. This will mark the first time in three years that the city has won over $30 billion from gamblers.

Casino License Renewals will Say a Lot about the Market

One aspect that’s causing some uncertainty with Macau is how the casino license renewals will go. All of the casinos must renew at some point between 2020 and 2022.

The problem comes in when considering that Macau officials have yet to announce their rules and regulations upon re-licensing. The hope among casino operators is that no unfavorable rules are added.

But assuming everything goes well, then Macau is set for more serious growth in the coming years.

 

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