China’s economy is slowing, but you wouldn’t know it by looking at the casinos in Macau. The former Portuguese colony is the only place with legalized casino gambling in China, and while this year the Chinese economy is likely to expand at its slowest pace since 1990, there’s no sign of a pause in Macaua’s casinos. Gross gaming revenue this month should jump between 10 percent and 12 percent over a year ago, according to a report published today by Barclays (BCS). For the whole year, the bank expects 16 percent growth.
Casino operators in the U.S. should be so lucky. Gaming revenue in Las Vegas is down 12 percent so far this year, and in the Midwest, casino revenue has dropped for six months in a row. While in the 1980s the only states with legal casino betting were Nevada and New Jersey, now almost every state in the country has casinos—and as Bloomberg Businessweek reported earlier this month, revenue is dwindling, with New Jersey down 44 percent since its peak in 2006.
Meanwhile, China’s gambling hub keeps on growing. Gaming revenue in Macau, the tiny peninsula and nearby islands an hour’s ferry ride from Hong Kong, last year hit $45 billion. Compare that with the $38 billion total not just for Vegas but for Atlantic City, all the Native American casinos, and everything else in the U.S.
If Hong Kong-based brokerage CLSA is right, the world’s biggest gambling destination still has plenty of room to get even bigger. Macau’s revenue will double by 2018, CLSA analyst Aaron Fischer writes in a new report, thanks to a multitude of new casinos scheduled to open on the Cotai Strip, the stretch of reclaimed land connecting the offshore islands of Taipa and Coloane.
Macau isn’t immune from the Chinese economy’s slowdown. The high rollers who get special VIP treatment at the city’s casinos are spending a bit less, for instance. Revenue growth for VIPs playing baccarat was lower in the first quarter, increasing 12.5 percent, down from an 18.3 percent increase in the last quarter of 2013.
But those big spenders don’t matter as much as they used to. As the place where 1.3 billion Chinese can gamble legally without leaving the country, Macau is shifting its focus to the hoi polloi rather than the VIPs. The mass-market segment accounted for 70 percent of gaming profit in the first quarter, Bloomberg Industries analysts Brian C. Miller and Tim Craighead wrote in a report published last week.