After a rough start to the year, the gaming ETF, VanEck Gaming ETF (BJK) , has experienced more than an 11% increase in the past six months mostly tied to the recovery of the Macau gaming region in mainland China.
Macau is the only place for legalized casino gambling in the country of 1.5 billion, and now following 26 consecutive months of gaming revenue declines, the region just concluded its third consecutive month of revenue growth leading to renewed hope for the region's viability.
While the reasons for the turnaround aren't yet entirely clear, Macau's downturn was pinned on the Chinese government's crackdown on corruption, which led to a decline in business from high-rolling government officials. However, Macau has successfully pivoted from being just a destination for gamblers to a resort town that attracts middle class visitors from China and abroad. That was no accident.
At the end of 2014, Chinese President Xi Jinping urged the region to diversify and move towards resorts. "It is important for Macau to adopt a global, nationwide, future-oriented and long-term perspective, formulate appropriate plans and blueprints for its development and promote sound economic and social development," Xi said at the time.
That type of turnaround takes time but Las Vegas-based Wynn Resorts (WYNN) , which just opened the Wynn Palace in Macau, has already seen the effects of the changes. Wynn has literally been on a roll in Macau, outperforming the wider industry there while reporting an increase in revenue of 11.5% in the third quarter. The company's overall EBITDA increased more than 9.1%.