Increasing non-gambling revenues in the local industry was one of the objectives outlined by the SAR authorities when renewing the concessions. According to some analysts, non-gambling revenue currently represents between 2 and 20 percent of each gaming operator’s total revenue.
However, the Macau authorities would like this percentage to approach the figures for Las Vegas, where this share is already around 60 percent. To achieve this goal, as part of the new concessions until 2033, the operators were obliged to provide investment plans for the non-gaming structure. In total, gambling companies have committed to spending a total of 108.7 billion patacas on non-gambling activities and the exploitation of foreign tourist markets.
The figure represents more than 91 percent of the total investment promised in the new concessions. The concessionaires will also be obliged to increase non-gaming investment by around 20 percent if Macau’s annual gross gaming revenue exceeds 180 billion patacas by 2027. The Macau government now believes that this figure could be reached this year, as up to August gross gambling revenue reached 114 billion patacas.
Sands at the top
Calculating the non-gaming revenues of the six concessionaires is not easy, as the reports differ widely (see box). However, from what has been found, it is possible to highlight some pertinent information. All operators recorded an increase in the proportion of non-gaming revenues. But this increase is due to a reduction in gaming revenues, rather than success in developing extraordinary revenues.
Sands China and Wynn Macau, for example, reported a drop between 2019 and 2023 in both their gaming and non-gaming results. The notable exception is MGM China, the only operator to report higher gaming and non-gaming results than in the pre-pandemic period.
When it comes to the percentage of non-gaming and total results, the Sands China group led in 2019 and remained at the top in 2023. However, non-gaming revenues fell: from around 440 million US dollars in 2019 to around 428 million dollars in 2023. In the second quarter of 2019, Sands’ non-gaming results represented around 20.5 percent of the 2.1 billion US dollars in total results for the group founded by Sheldon Adelson.
This percentage grew to around 26 percent in the same period of 2023, but out of a now smaller total of 1.6 billion US dollars.
In second place is Galaxy, which saw its percentage of non-gaming results grow from 15.4 percent between April and June 2019 to 23.8 percent in 2023. In Galaxy’s case, there were more non-gaming revenues in 2023 (264.3 million dollars) than in 2019 (259.1 million dollars).
Rounding out the podium is Melco Resorts & Entertainment – led by Lawrence Ho Yau Feng, son of the late gambling tycoon Stanley Ho – which expanded its non-gaming revenue component from 12 percent to 18.8 percent in four years.
Next is Wynn Macau, with an increase from 14 to 21 percent, due to a drop in total results from 769 million dollars in 2019 to 301.6 million in 2023.
MGM China saw its total operating results increase from 706.1 million dollars to 741 million dollars. MGM is, in fact, the only operator to have improved its total results compared to 2019. Unfortunately, the operator linked to businesswoman Pansy Ho did not break down its non-gaming results in 2019. However, according to its most recent financial report, it recorded around 71.3 million dollars through the non-gaming segment, or approximately 9.6 percent of the total.
SJM Holdings does not publish the total for the second quarter of 2023, only the results for the first half of the year, which meant that the results had to be calculated by subtraction.
In the second quarter of 2019, the non-gaming sector accounted for just 2 percent of the 1.07 billion US dollars reported by the operator linked to the historic STDM, a percentage that increased to 7 percent in 2023. However, between April and June, the operator recorded 684.6 million US dollars, the lowest figure of the six concessionaires.
Back to good health
After months and months of “agony”, the six gaming concessionaires also seem to have finally anchored in safe harbor, with successive quarterly results showing a return to operating profits. With the opening of the borders and the recovery of normal visitor flows during the peak seasons of the golden week of Labor Day and the summer vacations in August, the operators’ future also seems to be more golden.
Using the EBITDA or LAJIDA metric – earnings before interest, taxes, depreciation and amortization – the ‘winner’ in the second quarter – as four years ago – continues to be Sands China, with around 540 million US dollars in profit. This after ending 2019 with 765 million US dollars in positive operating results.
In second place is Galaxy with 324 million US dollars in EBITDA between April and June 2023, after 549 million in profits in the same quarter of 2019. Melco Resorts & Entertainment is again in third place with 213 million US dollars in EBITDA this year, after registering 442 million four years ago.
The American concessionaire, Wynn Macau, was in fourth place in the second quarter of this year, with 246 million, and reported 343 million in 2019. Despite a fifth place in this ranking, with 224 million, MGM China was the only operator to report higher operating results for the second quarter of 2019 (187 million US dollars). In last place is SJM Resorts, with an EBITDA of 55 million US dollars, less than half of the 128 million recorded in 2019.
The operating results reported by the six concessionaires in this second quarter represent different percentages from the figures recorded in the same period in 2019. According to their respective financial reports, the percentages of EBITDA in 2023 compared to 2019 are: MGM China (119 percent), Wynn Macau (71 percent), Sands Macau (70 percent), Galaxy (60 percent), Melco (59.3 percent), and SJM (42.6 percent).
