Macau overtook Las Vegas as the world’s gambling hub some years ago, as it consistently delivered huge gaming revenue growth, driven by the explosion of wealth in Hong Kong and mainland China. However, things have been slowing down significantly over the past year, which has taken a severe toll on casino companies with exposure to Macau.

The speed with which Macau’s fortunes have turned took the industry by surprise. As recently as February 2014, revenue was still growing by 40% year-over-year. This now seems like a distant dream. In May, Macau gaming revenue fell by 37% for the 12th consecutive quarter of declines and the fourth consecutive month of declines over 30%.

Several factors are to blame for this radical shift in growth, including a government crackdown on corruption, which affected the VIP market, tighter visa restrictions and new smoking bans. The government has urged businesses to diversify away from gambling and into more wholesome entertainment categories such as amusement parks and sports.

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As a result, the main U.S. casino operators with operations in Macau, MGM Resorts International (NYSE: MGM), Wynn Resorts Ltd. (NASDAQ: WYNN) and Las Vegas Sands Corp. (NYSE: LVS), have suffered. Earlier this month, MGM revealed that its overall first-quarter revenue fell by 11%, as MGM China revenue fell by a third. Revenue growth of 0.5% at its domestic operations were not enough to offset the huge declines in Macau, where VIP table game revenue fell by 45% and main floor table games saw revenue drop by 13%.

Wynn Macau saw an even more severe drop. First-quarter revenue fell some 38%, as adjusted property EBITDA tanked 45% to $212.3 million. Deutsche Bank recently reiterated its Sell rating on the stock, following an earlier downgrade by Zacks, highlighting just how bad things are getting.

Las Vegas Sands has the highest exposure to Macau, with its four casinos in the struggling region accounting more than 65% of the company’s overall revenue. First-quarter revenue in the Sands China business fell by 35%, while net income fell by 54%. The Sands’ managed to limit the overall declines in revenue to 25%, as its Las Vegas operations saw a less severe drop.

Along with their financial performance, these casino operators have seen their share prices decline sharply over the past year. Over this time frame, MGM is down by 23%, Las Vegas Sands is down by 33.6% and Wynn is down by nearly 52%, compared to a 9.5% gain for the S&P 500. As of yet, the there is no end in sight to the plunging gaming revenues in Macau, and speculating on a turnaround is risky business. Until the area shows signs of stabilization, these stocks may face more downside in the near future.

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