The Industry Focus team continues its rapid fire, year-end review of 2017 with a discussion of the tailwinds helping the gaming industry recover from a multi-year rough patch. Fortunes appear to have returned to Macau.
A full transcript follows the video.
This video was recorded on Dec. 19, 2017.
Vincent Shen: It's been a while since we covered the gaming industry on the show. I'll be doing a deeper dive on the major casino operators early in the new year, but for now, we can point out some tailwinds for these companies. What are we seeing, Asit?
Asit Sharma: We're seeing high rollers coming back into casinos. Macau is a great microcosm of the gaming industry. In October, it had gross revenue growth of 22%, a $3.3 billion monthly haul. What this says to me is, the high rollers are back. Especially in Asia, Chinese president Xi Jinping scared off a lot of gamblers with his reform, which started about two years ago. They're creeping back into the casinos. It also says that stock market valuations around the world are plumb. It's not just the U.S. Major stock markets in almost every geography except for a few developing regions, Latin America in particular, have been phenomenal lately, and that has a wealth effect on the psychology. You need these very wealthy people to get back into the casinos for the gaming industry to have a good year, and that's what we're seeing. It's not just tourism and small players like myself and Vince. It's the deep-pocketed, extremely wealthy people who feel great about where the markets are heading, and stable global GDP over the past few years.
Shen: Yeah. Macau has reported positive year-over-year gains in their gaming revenue for the first 11 months of 2017. This trend actually started back in August of 2016, and the market is picking up some serious momentum. They've seen 10 months of double-digit growth over the prior year. October, as you mentioned, saw about $3.3 billion, which is the highest level in three years. Keep in mind the Macau region is also facing some pretty easy comps right now, and we're still far from the peak revenue levels that casino operators enjoyed back in 2014 before that Chinese government crackdown on money laundering, outflow of money from China. Companies have already opened and continue to open luxurious billion-dollar resorts in the region to attract both mainstream tourists and higher-rolling VIPs.