Macau’s casino gross gaming revenues for May reached MOP32.35 billion (US$4.05 billion), a year-on-year increase of 9.3 percent said the local regulator on Tuesday lunchtime.
May revenue grew by the slowest in four months as casino operators accommodate more premium mass gamblers following a slowdown in VIP gaming’s expansion.
“We believe that the VIP segment is likely tracking below expectations, with any deceleration in growth attributable to a confluence of factors, including: less risk taking due to ongoing junket M&A [mergers and acquisitions], concerns over the broader anti-corruption crackdowns occurring throughout China (but not specifically targeting Macau), and some impact from China macro-economic issues,” Union Gaming Research Macau Ltd wrote in a note on Tuesday.
Macau authorities and China UnionPay, the only interbank network authorised to operate in the People’s Republic of China, are however according to regional media reports, cracking down on the use of bogus transactions done in Macau to circumvent mainland China’s tight cross-border money controls. That is thought by some analysts to have had an impact on mass-market gambling in recent weeks.
But Macau’s Secretary for Economy and Finance Francis Tam Pak Yuen said last month the government hasn’t set a deadline to restrict the use of China UnionPay swipe card devices inside casinos. UnionPay sales in Macau in 2013 totalled US$22.5 billion, equal to almost half of Macau’s 2013 gaming revenues, according to Reuters.
Meanwhile the gaming operators are preparing to focus on the premium mass segment to lead growth this year. Premium mass-market players account for the top of the mass market, playing at higher denominations than the mass-market average. Macau casino operators have said premium mass players provide higher margins than VIP gamblers because they don’t require the casinos to pay commissions to junket operators.
VIP baccarat accounted for 63.7 percent of total gaming revenue in the first quarter, said the Gaming Inspection and Coordination Bureau. Mass-market baccarat in the first three months of 2014 reached MOP28.5 billion. That was 12 percent higher than the full-year revenue for mass-market baccarat in 2009.
“Mass market appears to remain very strong, which is why we believe all management teams took the time to highlight during 1Q14 results that 70 percent plus of cash flows come from non-VIP – in other words, suggesting that there is less risk to the Macau cash flow story this year than headline GGR [gross gaming revenue] numbers would suggest,” said Union Gaming.
The research house, however, said it does not see a material change in investor sentiment.
The accumulated total for the year to May 31 is MOP165.87 billion, a year-on-year growth of 15.8 percent, said the Macau gaming regulator.
Union Gaming said it expects growth to be at the mid-teens level this year. “We are maintaining our full-year growth estimate of 14 percent that we established back in January,” it said.
(News updated 3.30pm)
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Daniel Boone Wayson
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