Gaming insights

Macau’s future an eternal guessing game

Written by Ben Blaschke

If there is one thing Macau’s gaming industry isn’t short on, it is predictions and estimates for the future. With government data having recently confirmed a 16th straight month of falling gaming revenues, it seems that predicting exactly when the downturn will end has become the latest craze with industry analysts around the world firing out their fearless forecasts.

But how much trust can we really put in their crystal gazing? In the long term at least, not much.

Macau has never been the sort of place to do things in half measures and it’s fair to say that the evolution of her gaming industry since liberalization continues to catch even the most traveled gaming experts by surprise. Certainly no-one anticipated the incredible rate of growth that would see Macau leave Las Vegas in its wake, nor that she would be brought back to earth just as fast.

And who could blame them? Keeping up with Macau is much tougher than keeping up with the Kardashians. Analysts have traditionally proved themselves to be pretty close to the money when looking a month or two ahead, but evidence suggests the further into the future they delve the more it becomes an educated guess. In fact, analysts are still offering vastly different numbers when predicting Macau’s gross gaming revenue (GGR) in 2016 as we saw just a few weeks ago.

On 21 September, Japanese brokerage Nomura predicted an eight percent decline in year-on-year gross gaming revenue next year. A note from their team of analysts said, “We expect three years of GGR declines – down 3 percent in 2014, 35 percent in 2015 fiscal and 8 percent in 2016 fiscal.”

Yet just a day later, UBS Securities analysts predicted GGR to grow by around 2 percent in 2016 and 10 percent in 2017. No doubt Macau’s casino execs like UBS’s estimates a lot more.

Such disparities are commonplace when it comes to predicting the future – so much so that analysts are constantly having to revise their own estimates. Union Gaming Securities, for example, began the year predicting a year on year fall in Macau’s 2015 GGR of just over 20 percent, but upon recently downgrading their estimate to 33 percent said they had previously “grossly underestimated” the impacts of government policy. That’s the frustration of trying to predict the unpredictable.

With operators anxiously anticipating a much needed end to Macau’s gaming slump, the forecasts provided by industry analysts have never been so eagerly anticipated. But whether they bring a promise of doom or Macau back in bloom, remember one thing – none of them saw this year coming.