The Euro 2016 soccer tournament in France is contributing to a slowing in Macau casino gross gaming revenue (GGR) during June, said a note on Monday from Japanese brokerage Nomura.
A number of investment analysts have in the past suggested there is potential for a negative correlation between the calendar for major international soccer events – mainly the FIFA World Cup and the UEFA Euro championships, which generally last for around a month – and Macau GGR.
They have argued that this is because a portion of the Macau casino clientele – mostly drawn from mainland China – like to put some of their gambling budget into soccer betting rather than spending it on Macau’s tables and slot machines.
China’s sports lottery – an officially licensed lottery system on the mainland – showed a spike in sales revenue during World Cup 2014, held in Brazil. But some soccer betting by Chinese consumers during such international tournaments is said to have been on unlicensed gambling products.
Xinhua, an official news agency, reported following World Cup 2014 – quoting China’s Ministry of Public Security – that more than RMB18 billion (US$2.7 billion) had changed hands in cases of illegal football gambling detected by the authorities during that tournament.
Nomura analysts Richard Huang and Stella Xing said in their Monday note regarding Macau casinos’ June performance to date: “With a lower-than-expected VIP win rate of 2.70 percent (versus theoretic average of 2.85 percent) and the impact from the commencement of the EuroCup [Euro 2016] (from 11 June onwards), average daily gaming revenue (GGR), excluding slots, was down 22 percent week-on-week to HKD432 million [US$55.7 million].”
“June 2016 thus far has been much weaker than our original expectation, with gaming revenues tracking at a 7-11 percent year-on-year decline (versus our original forecast of flat year-on-year),” said the Nomura team.
“We continue to expect a slow-grind recovery in GGR, but the fact that June 2016 GGR is heading to a five-year low (the last time GGR dipped below HKD16.0 billion was in September 2010) highlights the potential risk of demand disappointment,” they added.
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"The six Macau casino operators should not be penalised for upping expenditure on player incentives, so long as their EBITDA margins are not materially diluted”
George Choi and Ryan Cheung
Analysts at Citigroup