Finance house Nomura is warning that the volumes of VIP revenue and mass revenue reported by the Macau casino industry in November and December are “likely to be distorted by table reclassification”.
Some casino operators have reportedly reclassified some mass tables to VIP following the smoking ban on casino mass floors.
Although neither Macau’s gaming regulator – the Gaming Inspection and Coordination Bureau – nor the city’s casino operators provide detailed breakdowns of monthly returns, several gaming analysts have access to monthly (and even weekly) unofficial industry results by gaming segment.
Since October 6, smoking on casino main floors is only allowed in enclosed airport-style smoking rooms that do not contain any gaming tables or slot machines.
In the run-up to the new smoking regime, guidance from government officials was that casino operators would be able to set up smoking areas with gaming tables and slot machines on non-main floor zones “that are of limited access to specific games and gamblers”.
This was understood by casino managements to cover not only VIP rooms but also premium mass gambling areas when they were isolated from the rest of the mass-market floor.
However less than one week before the rule changes were implemented, a press statement from the Health Bureau said smoking would not be allowed in premium mass gaming areas – regardless of whether they were isolated from the main floor. It was at this point that some casino operators – seeking to bolster their businesses at a time when gross gaming revenue fell in the mass segment as well as the VIP – were said to have explored the idea of reclassifying some areas and some tables.
“[The table reclassification] will likely cause confusion among investors, and it may not be until companies report fourth-quarter results that investors get an accurate read on the real trend in mass and mass margins,” a trio of U.S.-based Nomura analysts led by Harry Curtis wrote in a note issued on Tuesday.
Casino operator Melco Crown Entertainment Ltd has recently reclassified some of its premium mass tables, Credit Suisse AG said in a note earlier this week. The gaming operator and Macau’s Health Bureau are embroiled in a dispute over a smoking area at City of Dreams (pictured), the company’s flagship casino resort in Cotai.
A note from Daiwa Capital Markets issued on Monday quoted the management of SJM Holdings Ltd as saying it had designated 16 to 18 mass tables to VIP in Casino Lisboa to counter the smoking ban’s impact.
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40 gaming tables
Granted by Macau's Gaming Inspection and Coordination Bureau to casino operator Melco Resorts and Entertainment in January