Mass-market table and slot business in Macau casinos could benefit next year from “onshoring” of Chinese consumer play that in pre-pandemic times might have gone to neighbouring Asia Pacific (Apac) gaming venues, says a report from the Morgan Stanley banking group.
“According to our estimate, 20 percent of all Asia (ex-Macau) mass revenue could come back to Macau by 2022,” stated analysts Praveen Choudhary, Thomas Allen and Gareth Leung.
The institution estimated – based on industry data and its own research – that Asia-Pacific casino gross gaming revenue (GGR) for mass-market table games and slots, generated outside the Macau (pictured) market, was about US$10.3 billion in 2019.
Assuming a general market recovery next year, were 20 percent of the earlier ex-Macau figure to be channelled instead via Macau in 2022, that would mean up to an additional US$2.06-billion revenue for the Chinese gambling hub.
“With higher travel restrictions,” in terms of regional travel by mainland Chinese amid the Covid-19 pandemic, “we expect part of this business to come back to Macau,” stated the Morgan Stanley team.
The report did not make reference to other possible headwinds for Asia-Pacific casinos beyond Macau, as identified by other analysts: China’s creation of a “blacklist” of overseas gaming destinations that specifically seek to appeal to Chinese consumers; and China’s criminalisation of the act of assisting mainland residents in “overseas gambling”.
A Macau scholar recently told GGRAsia there was as yet, no definitive view of whether the criminal law change could also affect the Macau market.
The Morgan Stanley report suggested nonetheless that a circa 4 percent reduction in operating costs market-wide by the six Macau licensees during the drop-off in business amid Covid-19 travel restrictions, was likely in 2022 to help raise by 15 percent the sector’s earnings before interest, taxation, depreciation and amortisation (EBITDA).
Morgan Stanley additionally provided an estimate – based it said on casino-industry data and its own research – on the market-share breakdown for mass-market gaming revenue in 2019 among Asia-Pacific casino jurisdictions.
The institution estimated Macau had about 66 percent of mass revenue that year – the last ‘normal’ trading period before the pandemic – with US$21.9 billion.
Among the other markets, the duopoly in Singapore had just over 8 percent, with US$2.7 billion.
Australia and New Zealand jointly had about US$2.6 billion; and the Philippines accounted for circa US$1.8 billion of regional mass-market revenue, estimated Morgan Stanley.
Malaysia and South Korea had respectively generated about US$1.4 billion in mass revenue each; and Cambodia about US$0.5 billion, said the institution.
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VIP share of Macau's gross gaming revenue in the third quarter of 2021