Macau’s VIP Gaming Sector Is in for a Bumpy Ride

Macau’s famous VIP gaming sector has been forecasted to decelerate in the second half of the year. Although Macau’s VIP gaming sector actually performed much better than expected in 2017, Bernstein, a well-known brokerage, has predicted that there will be big changes in 2018 because of what they’ve described as ‘structural headwinds’.

Reasons for the Forecasted Deceleration in 2018

There have been numerous issues predicted for 2018 that will affect the VIP gaming sector in Macau. These issues are not all speculation; some of them have been confirmed to be introduced such as:

• Property cooling measures instituted by the Chinese government
• A general credit contraction in China
• Increased regulations in the Macau SAR
• China’s ever-increasing focus on capital outflow

The reason why a lot of these issues affect Macau, although they are happening in China, is because China supplies Macau with the majority of its VIP gaming clients. With the abovementioned issues predicted for China, there will be a slower stream of VIP Chinese clients visiting Macau, mostly because of less money being available to spend on luxuries.

While the deceleration is not estimated to be major, it is predicted the growth, which has been steadily increasing in the past years, will drop down to 8%. Macau’s VIP gaming sector experienced a year-on-year rise of 26%, which was the highest of any of the preceding years.

Not All Bad News

It is not just Bernstein who believes that the VIP sector is set to decelerate. In fact many brokerages and individuals have agreed with them. So while it can be concluded that Macau will indeed experience a considerable deceleration in the last half of the year, it is not in fact bad news for Macau.

Although there is scheduled to be a big drop in the high rollers and VIP clients, Macau can still depend, and even more heavily now, on their mass market of players who do not fit into the VIP category. Macau realises this and is set to provide more amenities for a variety of clientele, with VIPs not being the major focus.

Many analysts remain very positive about Macau’s bright future in gambling.