In this regular feature in IAG to celebrate 18 years covering the Asian gaming and leisure industry, we look back at our cover story from exactly 10 years ago, “Snakes and ladders”, to rediscover what was making the news in February 2013!
If you were to look at a graph of Macau’s gaming revenues over the past two decades, you would not find a greater contrast decade to decade than GGR of 2012 versus GGR in 2022. Yet with the calendar having now ticked into 2023 and some long-awaited optimism finally creeping back into the city with borders finally opening again, there are plenty of similarities to be had with the year that was 2013.
As has become part of Macau folklore, 2013 to this day remains the most successful year in the local industry’s history with GGR reaching a record MOP$360.75 billion (US$45.2 billion).
And it came as no great surprise either with IAG’s cover story in our February 2013 issue, titled “Snakes and Ladders”, predicting a VIP renaissance and a booming mass market for the year ahead.
“Forecasts out of the gate are bullish,” we wrote at the time. “Analysts are talking about anywhere from 10% (Citigroup) to 18% (JP Morgan) growth coming off a 2012 in which the industry racked up MOP$304.14 billion (US$38 billion) in gross gaming revenue, surpassing a banner 2011 and handily at +13.5%.
“What [this] implies is a market that will be about US$4 billion to US$7 billion larger than it was in 2012 and more profitable by upwards of US$1 billion or more.”
As it turned out, both Citigroup and JP Morgan underestimated the 2013 GGR figure, which finished some 19% higher than 2012 – led by a VIP market that accounted for almost 70% of industry revenue. Such numbers certainly won’t be repeated anytime soon – not least because the VIP sector has been crushed by China’s cross-border gambling crackdown and the subsequent collapse of the junket industry – but there is at least reason to believe 2023 could also prove to be far more profitable than many originally thought.
Just days after Macau authorities announced in early January an end to almost all border restrictions on arrivals from the mainland, Hong Kong and Taiwan, JP Morgan issued a note in which it described its 2023 estimates as “a bit too conservative”, instead suggesting that the mass market segment could fully recover to 2019 levels before the end of the year.
If this were to prove true it would not only reverse the recent fortunes of Macau’s operators in rapid time but also fulfil another IAG prophecy from that February 2013 cover story – the “amazing story that is the Macau mass market.
“These are the players at the main-floor tables and slot machines who have been generating top-line growth at quarterly averages of 27% or better going back to the end of 2009,” we wrote at the time.
“Much has been written about them and the way they’re changing the very architecture of industry profitability as the volume of their play grows. This will be the most closely watched of Macau metrics: this fundamental shift in revenues from their historical dependence on a relative handful of super-rich gamblers from the immediate environs of Hong Kong and Guangdong to the tens of millions of urbanized mainlanders working and saving their way to the lineaments of a middle-class lifestyle.”
