For more than four months, thousands of Hong Kong residents have protested against the passing of a new anti-extradition bill. These protests have taken a toll on tourism in Macau. As a result, Wynn Resorts is experiencing a significant revenue dip from its Macau casino operations.
Wynn Resorts Ltd. owns and runs two major casino-resorts in Macau. Today, we’re looking at how the recent protests in Hong Kong have affected this territory. Let’s get into it!
Hong Kong Protests in a Nutshell
In case you haven’t heard, Hong Kong has been the center of massive protests for the past several months. Hundreds of thousands have gathered to protest the government’s proposal to change the territory’s extradition laws. It’s an on-going issue with no signs of slowing down.
Back in February, the Hong Kong Security Bureau proposed a new bill that would create an amendment to the territory’s extradition laws. The Fugitive Offenders and Mutual Legal Assistance in Criminal Matters Legislation would have allowed Hong Kong to extradite people in Hong Kong to Mainland China.
This was cause for serious concern. Opponents of the bill feared that this new bill would give Chinese courts control over Hong Kong residents. There was fear that the bill would apply not only to criminals but political dissidents, as well.
The Hong Kong protests were successful. In June, the government “suspended” the bill. On July 9th, the bill was “dead.” Protests, however, have continued here.
Many in Hong Kong are now calling for direct elections. Residents here are fighting for the right to choose legislative council members and the Chief Executive. Interestingly, the continuing protests have had an impact on Macau, the gambling hub of Asia.
Wynn Resorts Comments on Macau Revenue Declines
For most of 2019, gambling revenue in Macau has dropped. A number of factors have contributed to this decline. First, the US trade war with China has significantly impacted the Chinese economy. More people from Mainland China are now choosing to hold onto their money, rather than gamble it in Macau.
As we’ve already mentioned, the recent protests in Hong Kong have also had an impact on Macau’s revenue. One of the top gambling operators here, Wynn Resorts, recently commented on the revenue dips to the media. CEO of Wynn Resorts Matt Maddox feels this issue is a temporary one.
“Clearly in July, there has been some softness in VIP (business)and when you have hundreds of flights canceled out of Hong Kong and some reluctance to travel, I do think that is impacting the premium end of the business,” he said. “However, that, to me, feels very temporary and has really nothing to do with our business and everything to do with what’s going on in the region.”
Wynn Resorts continues to invest in Macau. Historically speaking, the small territory is one of the most profitable gambling destinations in the world. Let’s look at what to expect here over the next several months.
Macau’s Revenue Falls in 2019’s Second Quarter
The trade war and Hong Kong protests have significantly impacted the number of gamblers visiting Macau. In May, revenue in Macau increased slightly. Unfortunately, earnings over the first six months of the year are down.
New reports indicate that gambling revenue for the year’s first half is down by 0.9%. This represents a decrease of $197 million. Some analysts are now crediting the recent scandal regarding VIP junkets as a reason for the revenue decline, as well.
Most agree that this revenue decline will eventually end. Unfortunately, no one knows exactly how long the protests and US-china trade war will continue. This week, President Trump announced that he’s considering a new 10% tariff on $300 worth of Chinese exports.
Overall, Wynn Resorts is posting solid revenue numbers. This company recently opened the Encore Boston Harbor casino which has proven to be tremendously successful. We’ll need to wait and see how long it takes this company’s Macau operations to become profitable.
Make sure to stay tuned for updates on this situation over the next few months!