Nomura analysts are warning that starting October the breakdown of casino gross gaming revenue (GGR) in Macau into mass and VIP may become “messy”. That is because of the new rules governing smoking inside Macau casinos.
They state that all mass-market casino floors in Macau must go smoke-free starting from October 6, following that month’s Golden Week holiday.
“Starting in October, the GGR data could be messy depending on how the DICJ [Gaming Inspection and Coordination Bureau, Macau’s gaming regulator] classifies premium mass revenues,” analysts Louise Cheung and Harry C. Curtis wrote on a note issued on Monday.
“As it stands, premium mass rooms that remain smoking after the October 6 mass floor smoking ban should technically fall under the VIP definition (i.e., VIP could be artificially boosted while mass appears lower) so it would be interesting to see how the DICJ ends up classifying those premium mass revenues,” the two analysts added.
According to the new rules on smoking inside casinos, casino operators can ask 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 is understood to cover VIP rooms but also premium mass areas that are isolated from main floors.
Premium mass-market players account for the top of the mass market, using bets measured in many thousands of Hong Kong dollars per hand. 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. Several casinos already have separate rooms to serve these customers and this is a fast-growing segment.
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”The Macau government is not aiming to trivialise or drive out the junket sector, but to regulate the sector so that it would not hurt Macau’s reputation”
Alvin Chau Cheok Wa
Chief executive of privately-held VIP junket business Suncity Group