Macau’s gambling industry has been in decline for the past 18 months and casinos have struggled to post profits. The Cotai 2.0 – Galaxy Phase II which opened its doors to the public in May has been an exception to the rule as the new casino has proven to be a hit with Macau’s gamblers. Galaxy reported a market share spike by 6.4 percentage points as revenues climbed, giving Galaxy a 25% market share to outperform all the other operators in the region.

There has been a lot of speculation over the number of new casinos scheduled to open in Macau considering the market stagnation and the anti-corruption crackdown being imposed by Beijing. However the Galaxy Phase II project has appeared to validate the concept of ‘build and the clients will come.’

While it is still early days for the Galaxy Phase II, it has already established itself to be the number one casino in Macau. Swiss bank Credit Suisse reported that during the first 2 weeks of June, Galaxy had managed to capture more than 25.1% of the market share and overtook Sands China who had 22.1% and SJM who had 20.3% of the market. While the Galaxy Phase II has been responsible for a market share spike of 6.4 percentage points, SJM, Melco Crown Entertainment have reported a drop of 2 percentage points, while Sands China have reported a drop 4 percentage points.

While the Galaxy Phase II has had a successful debut, Galaxy Chairman Lui Che Woo was not overly impressed with the numbers. Lui Che Woo said that the performance was satisfactory, but not nearly as good as what the company initially estimated. The next couple of months will reveal if market conditions will get the better of Galaxy Phase II or if the casino will continue to thrive in the midst of market stagnation.

Based on market research performed by leading firms Sterne Agee, Credit Suisse and Wells Fargo the gaming industry in Macau will drop by 34.8% in June 2015 when compared to the same period in 2014. Sterne Agee released a statement which read “Recall week one of June was negatively impacted by hold and checks also cite the impact of China’s National Higher Educational Entrance Exam held late last week. However, despite aggravating factors, week one revenue results were disappointing given a two-week proximity to the opening of Galaxy’s Phase II and as such June’s second week’s revenue result is welcome news.”

 

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