US-China Trade War Can Potentially hit U.S. Casinos in Asia

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US-China Trade War Can Potentially hit U.S. Casinos in Asia

A trade war between the United States and China can potentially hit U.S. Casinos In Asia.

According to Forbes, American casinos around the world could be among the first victims of the commercial war triggered by US President Donald Trump against China. Since 2012, China has become one of the greatest resources for international tourism, and Beijing has used Chinese tourists as a tool to reward friendly nations and punish opponents. The commercial war will, therefore, hit also the Macau casino market. In Macau, there are in fact three large concessions controlled by American companies.

Chinese visitors to Macau represent 2/3 of Macau’s visitors and account for 90% of the revenues of gambling. According to the Macau Statistics and Census Service (DSEC), visitors arrived in Macau in the first six months of the year were almost 17 million, an increase of 8% compared to the same period of 2017. After the Chinese, it is mainly the citizens of Hong Kong, Korea, and Japan who come to Macau.

Through the subsidiaries of Hong Kong, Las Vegas Sands, Wynn Resorts, and MGM Resorts International, US control three concessions. From an economic point of view, Macau is an unmissable opportunity for American companies.

Macau’s revenues are five times higher than the Las Vegas revenues.

Las Vegas Sands group in its last set of results reported year-on-year earnings were up around 20% in the three months to December 31, 2017, thanks largely to Macau.

According to a Casino News Daily report, the Macau casino industry outperformed its counterpart in Las Vegas. According to the document, in 2017, Macau generated 33 billion, while Vegas 7 billion.

The MGM concessions will expire in March 2020, while those of the other two companies in 2022. A $ 4 billion resort has also just opened in the Cotai gaming hub. it is, therefore, possible that during a trade war the Chinese government can rival these concessions.

The recent anti-corruption campaigns launched by Xi Jinping also have already severely affected the proceeds of Macau, for a figure of around 17 billion dollars (38%).

One of the ways in which Beijing could hamper the business of these companies is by increasing taxes on foreign concessions. An alternative weapon that could be used may be to encourage Chinese players to invest in Chinese casinos rather than foreign ones. Macau, in any case, appears to be rather exposed and fragile in this imminent trade war, both as regards of Chinese and American interests.

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The commercial war then took place at a very unfortunate moment, as the new bridge connecting Hong Kong to Zhuhai and Macau is ready and will be opened this fall. Once operational, the bridge will allow a greater and more fluid flow of traffic from Hong Kong to Macau, at least in the long run, given that at least in the first phase only a limited number of permits will be issued.

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Photo by Gra_Turner (Pixabay)

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