Macau’s July GGR estimates conservative amid China crypto crackdown

A recent crackdown by mainland authorities on money exchange gangs in Macau, specifically targeting the use of cryptocurrencies for money transfer, is likely impacting money flow and visitation in Macau, according to Seaport Research Partners.

Seaport analyst Vitaly Umansky said in a Monday note following the publication of Macau’s June GGR (gross gaming revenue) results that Macau may face near-term challenges due to the crackdown, though these effects should soften over time.

These challenges may have already impacted June’s GGR, which was MOP$17.7 billion (US$2.20 billion), falling below consensus.

“Macau has seen a rise in criminal activity related to illegal money exchange over the past year,” Umansky wrote, adding that this issue “has been elevated to a national level, with China authorities addressing the use of cryptocurrency to move money out of China.”

“We believe this crackdown is negatively impacting money flows into Macau, causing some individuals to postpone their visits.”

“This activity will likely continue to affect GGR over the next month or two, but we expect the crackdown to soften and liquidity in Macau not to be significantly impacted in the medium term.”

Despite these concerns, Umansky said the summer outlook remains “reasonably solid,” with gaming revenues expected to rise steadily from late July. GGR for July is projected to grow by 9% month-on-month to MOP$19.2 billion (US$2.39 billion).

“July is typically a strong month, with base mass visitors increasing later in the month and more so in August,” Umansky said.

“Due to the softness in base mass, the continuation of the Euro Cup, and the crackdown on money movement activity, we are more conservative on July than usual. Any major weather events in the region could negatively impact revenue and visitation during the summer months.

“However, any increase in visitation would help drive base mass GGR above our estimates. The recent crackdowns in Macau and China on money changers and money movement may cause near-term challenges for GGR, but we do not expect this to be a long-term issue.”

In early June, China’s public security authorities announced a special deployment to crack down on crimes by Macau-based “Money Exchange Gang Members,” with increased cooperation from the Macau Police.

Original Story by: IAG