World Gambling News - 30 May 2015

Discussion in 'Good News - Bad News!' started by Marina, May 30, 2015.

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  1. Marina

    Marina Administrator Staff Member

    The Costs of the Chinese Crackdown

    There has been a lot of discussion as of late about the potential gains and losses due to the corruption crackdown in mainland China. Some investors are welcoming the crackdown by investing in other
    Asian countries. Other investors and many analysts are not as optimistic about the future of casino gambling, particularly in Asia.

    As Chinese President Xi Jinping’s crackdown spread across the mainland, many VIP gamblers became more apprehensive about leaving the mainland to go to neighboring Macau, causing the first annual
    loss in the nation’s gambling history. Unfortunately for Macau, the gambling and tourism industries are some of the largest pieces of its economy, meaning the territory as a whole is now struggling. If the
    fall increases then the largely autonomous Chinese territory may have to hedge its bets in other industries or be absorbed into the mainland before 2049, when it was initially agreed that it would become
    a part of the mainland.

    For better or worse, there will be $20 billion of new developments opening up within the next two years as no one has backed out. Some of the new developments are the Galaxy (set to open June 3rd)
    and at least six others, one of which is the new Wynn resort.

    Analysts at Morgan Stanley do not expect a silver lining, predicting a drop of 24% in Macau alone, along with plummeting forecasts in other Asian nations. Some countries are looking to places like Singapore
    and the Philippines as examples of legalized gambling done well, even in the midst of the crackdown. Japan, South Korea, and Vietnam are all considering expanding their casino gambling laws to accommodate
    local gamblers, who have not been able to gamble at their countries’ casinos before. Some investors are confident about the current and prospective markets for casinos, believing that Chinese VIPs will make
    their way out of the whole of China to other countries. Others are worried that new markets will envelop other, older markets, causing them to collapse.

    Aaron Fischer of the CLSA, a leading Asian equity broker, also believes that other countries have the potential to make gains across the continent but also is cautious, as he doesn’t believe that it will offset the
    losses that have hit Macau. Praveen Choudhary, of Morgan Stanley, has very similar beliefs about the future of the Asian market. He stated that he believes in the Asian market “in the long term” but feels that
    Macau needs to “hit rock bottom first.” Unfortunately, he has no idea how far down this drop will go before it flattens or begins to rise again.

    Morgan Stanley representatives also believe that the Chinese government’s crackdown may have global consequences as Chinese gamblers become afraid to leave and return to the mainland, lest they be seen
    in the same light as the criminal element that caused the crackdown in the first place.

    There are a few questions that remain, locally, for Mainland China. One of the big questions is whether or not the crackdown will ultimately be effective. It could simply be putting a Band-Aid on a bullet hole,
    or it could even simply be ineffective, as the criminal element continues to do what they were doing in the first place. Another big question is whether the crackdown will run the criminal element into other
    territories or nations, spreading China’s problem throughout Southeast Asia. The final question, and possibly the most pertinent, is whether or not the Chinese VIPs are now simply gambling illegally inside
    Mainland China, feeling that illegal gambling there is less risky than legal gambling elsewhere. This activity would be a huge backfire to President Xi Jinping’s crackdown, as it would simply strengthen the
    criminal element in China’s mainland.



    UK Gambling Commission (UKGC) Survey Findings

    The UKGC recently conducted a survey using demographic data from 2008 to 2014. The study analyzed the habits and people that are drawn to online gambling.
    The study had some interesting things to say about the UK’s online gambling market.

    Some of it was somewhat expected. The more well-to-do sector of the country (more specifically, the top two tiers) were found to spend more on online gambling while the lower two socioeconomic tiers
    spent less. What may not have been expected is the fact that online gambling is rising in the lower socioeconomic tiers as well, from 5.6% in 2008 to 9.3% in 2014. This was echoed in a Statistics Canada
    survey that found a similar trend, saying that online gambling is six times more popular among high-income earners.

    What was interesting is the fact that those with degrees from higher education were nearly 45% more likely to gamble than their lesser-educated peers. The study also found that the online gambling crowd
    was younger, but not significantly so, as the participants in the 35-54 age range has been rising quicker than the younger demographics, making the difference almost insignificant.
     
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