hich used to account for the bulk of Macau’s revenues, has collapsed due to strict regulation, while the lowest spending mass segment involving minimum bets of about $60 is still not back to 2019 levels. Macau is the only place in China where casino gambling is legal. With expectations of 14 per cent gross domestic product growth this year, the special administrative region is an outlier as the rest of the country grapples with a slowing economy and sluggish consumption. “Macau is doing well but not all operators are enjoying that recovery,” said DS Kim, an analyst at JPMorgan in Hong Kong. Big operators like Sands and Galaxy have outsized exposure to the lower end of the mass market, hence their share momentum was not as good as they or the market had expected, he said. Galaxy and Sands China shares have fallen by 11.2 per cent and 16.7 per cent respectively since the start of the year, whereas MGM China and Wynn Macau are up by 46 per cent and 15.7 per cent over the same period. “For now, as traffic and gaming demand has not yet recovered to its 2019 levels, MGM China and Wynn Macau, given their relatively smaller size and premium mass-focused business, benefit from better operating efficiency including marketing and sales to premium clients,” said Jennifer Song, an analyst at Morningstar in Shenzhen. Game face Visitors to Macau are at 75 per cent of pre-pandemic levels in 2019, government data shows, while gambling revenues are expected to reach 80 per cent of pre-Covid figures this year. On recent earnings calls, the casino operators outlined their growth strategies. MGM China has benefited the most from Macau’s recovery, with its gross gaming revenue share rising from 9.5 per cent in 2019 to more than 17 per cent this year. It was the only operator allowed an increase in gaming table numbers under a government reallocation from January 2023 and it is adding more villas and suites to its properties. Wynn Macau, which is building a food hall, continues “to punch above our weight on a revenue per hotel room basis generating meaningful market share,” CEO Craig Billings said. But executives at Sands China and Galaxy, which have more tables, said their resorts are well-poised to catch up. Galaxy will open its high-end Capella Hotel next year and increase demand from the premium mass segment, said Ying Tat Chan, Galaxy’s chief financial officer. Mass-market-focused Sands China, which closed some hotel rooms and its 15,000-seat show arena for renovations in January, remains the biggest operator in Macau. CEO Grant Chum said revenue per patron was higher than before Covid, and as the number of visitors returned to pre-pandemic levels, Sands China would be “best placed to capture that growth when it comes.” The casino operators did not respond to requests for further comment. Diversification The focus on premium visitors also appears to be aiding with non-gaming spending, which was up 11 per cent in 2023 to 71 billion patacas ($8.82 billion) compared with 2019, according to Macau’s tourism bureau. That is a welcome sign for authorities mandating casinos diversify away from gambling into other attractions like shows, shopping and museums. Any further economic slowdown in China would have ripple effects on Macau and be first felt in gambling, executives and analysts said, making it key for casinos to build out their non-gaming amenities to attract a wider variety of visitors. The non-gaming investments can also boost the casinos by bringing in more foot traffic, said Vitaly Umansky, senior analyst at Seaport Research Partners. Chinese authorities are publicly trying to boost Macau’s appeal, with a top official praising it as the “apple of China’s eye” during a visit in May, just days after the central government expanded a scheme to allow more mainland visitors to travel to Macau. Attracting visitors outside of mainland China, which accounts for 70 per cent of arrivals, is also a growing focus. During the first week of May the top spending gambler was for the first time ever a non-Chinese patron. The high roller was one of more than 190,000 arrivals from South Korea this year, now Macau’s largest source of visitors outside greater China. ($1 = 8.0470 patacas) (Reporting by Farah Master; Editing by Jamie Freed)