David Fickling is a Bloomberg Gadfly columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.

It's great having a hand full of aces if that's the highest card in the deck. If the rules change and it reverts to being the lowest, you're in trouble.

That's a lesson that Macau's casino operators have been learning during the long descent for gambling spending that followed the peak at Lunar New Year in 2014. Exposure to the territory's gaming tables used to be a cherished asset. These days it looks increasingly like a liability.

For an illustration of how things have changed, take a look at Las Vegas. MGM's vast Bellagio hotel, with its art gallery, Cirque de Soleil shows, and almost 4,000 rooms, has been a bellwether for the city's pursuit of the mass market ever since it opened in 1998. For the past five years, Ebitda has trailed that from the 579-room MGM Macau, thanks in large part to high-roller rooms where HK$772 billion ($99 billion) was wagered during 2014. The tables have now turned again:

What Happens in Vegas
Adjusted Ebitda from leading MGM casino properties
Source: Bloomberg data

The American resurgence is in line with a trend that's played out across the six major casino companies operating in Macau. With no way to shield themselves against the slump in gambling volumes, the Hong Kong-traded casinos have suffered the sharpest drop in earnings . SJM's Ebitda has fallen 69 percent since peaking in the six months through June 2014, while Galaxy Entertainment's is down 47 percent.

Going All In
The most Macau-focused casino operators have suffered most from the downturn
Source: Bloomberg data, company reports
Note: Adjusted Ebitda shown for Melco Crown, to maintain consistency with Sands, MGM and Wynn. Galaxy and SJM don't consistently reported adjusted Ebitda so reported Ebitda has been shown.

Casinos with U.S. listings or parent companies have other irons in the fire and have performed somewhat better.

Each Way Bet
Adjusted Ebitda from Wynn Resorts' Nevada properties has remained stable while Macau has weakened
Source: Bloomberg data, company reports

Melco Crown and Las Vegas Sands, which have resorts in Manila, Singapore and the U.S., are down 38 percent, while Wynn Resorts has dropped 39 percent.

Strong Hand
Profits from Singapore and the U.S. have helped cushion Las Vegas Sands' adjusted Ebitda from Macau
Source: Bloomberg data, company reports

MGM Resorts, the least Macau-exposed of the four U.S.-traded companies, has slipped a mere 7.9 percent.

Win Some, Lose Some
Rising adjusted Ebitda at MGM Resorts's domestic properties has offset Macau's slowdown
Source: Bloomberg data, company reports

While there have been some signs that Macau's prospects are improving, don't expect its difficulties to disappear anytime soon. Hotel occupancy has been the wrong side of 80 percent for most of the past year, and the pressure will only increase: Sands, MGM, Wynn, and SJM plan to add more than 8,000 rooms to the existing stock of 32,000 by the end of 2017, which ought to depress room rates.

Meanwhile, casinos' investment plans were based on projections of robust gambling growth that's showing no signs of re-emerging, though revenues appear now to be stabilizing after a Chinese government crackdown in 2014. 

China would like the territory to reorient toward family-friendly mass tourism. Vegas carried out that switch years ago, and gambling accounts for only 35 percent of revenue these days.

Investors willing to bet that casino destinations can make the switch from sin city to convention playground need not wait for Macau's plans to come to fruition. They may be better off focusing on the town that's already performed that maneuver.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. Earnings declines shown are for the period containing Lunar New Year 2014 compared with the most recent results. These are semi-annual for Galaxy and SJM, and quarterly for all others.

To contact the author of this story:
David Fickling in Sydney at

To contact the editor responsible for this story:
Matthew Brooker at