Crackdown on illegal money exchangers contributes to Macau GGR summer slump
Macau’s gaming industry could fall short of revenue estimates for July. JPMorgan analysts expect the city’s casinos to generate MOP18.5 billion (€2.1bn/£1.73bn/$2.25bn) in gross gaming revenue (GGR) this month. That would be just shy of the MOP19 billion forecast.
June, too, failed to meet projections. Although Macau GGR was up 16.4% over 2023, it fell short of the median analyst estimate of 17.5%. It also remained 25.7% under pre-Covid levels.
In Macau, a mid-summer slump is to be expected. Chinese tourists come en masse for the spring Golden Week holiday in May. The surge is typically followed by what Citigroup called a “seasonal trough” in Macau GGR.
Crackdown on money exchanges a factor
This year, another factor is in play: the government’s new crackdown on illegal money exchanges. The campaign, launched in June, was designed to curb capital flight and loan sharking. It’s also intended to keep Chinese tourists from exceeding the amount of mainland currency that can be carried over the border per trip.
Chen Shiqu of China’s ministry of public security has said “money exchange gangs” that lurk around casinos illegally provide gamblers with “a large amount of Hong Kong dollars, in cash.” HKD is the coin of the realm in the city’s casinos.
Citi analysts said concerns about illegal money changers are overstated.
“Most players… have their own legitimate ways to get their funds over to Macau, sufficient for them to bet as much as HK$1 million (€117,700)” per hand, wrote George Choi and Ryan Cheung.
In comments to GGRAsia, Ben Lee, managing partner at IGamiX Management and Consulting, said, “With the casinos themselves offering currency exchange at their cages, one must wonder why there is demand for illegal money changers, unless they are not really changing money.”
VIPs, premium players will feel the pinch
Lee suggested that the touts are actually “transferring money across the border”, which is a major concern of the Beijing government. Among gamblers, he said, VIP and premium players are most likely to be affected by the clampdown. “The amounts those players gamble are far beyond the limits they are permitted to carry across the border. Some of the grind mass, particularly those who need funds beyond the daily ATM limit, will also be impacted.”
Hoffman Ma, executive director of Hong Kong-based Success Universe Group Ltd, said mass-market players are likeliest to feel the pinch.
“The kind of gaming patrons most impacted are not likely to be those of high net worth, or who come frequently to Macau, as those kinds of players usually have their own funding channels,” he told the news outlet.
And any additional scrutiny of financial transactions “will result in short-term drops in our gaming revenue”, concluded Lee.
Written by Marjorie Preston