Global casino VIP revenue stopped declining sequentially in the first quarter of 2016, after eight quarters of decreases, says a report issued on Wednesday by Morgan Stanley.
In Asia, VIP revenue actually increased quarter-on-quarter – albeit by just 1 percent – to US$4.65 billion, the document stated.
“However, for 2016, we still forecast negative growth, though growth outside Macau should outpace that in Macau,” said the Morgan Stanley team. It added that global VIP revenue was US$5.15 billion in the first three months of 2016, compared with US$5.14 billion in the previous quarter.
According to the investment bank, consolidation among the junket operators, a stabilisation of China’s currency and recovery in the Chinese property market helped drive stabilisation in VIP casino gambling. Chinese high rollers are widely seen as a key component of the world market for casino VIP gambling.
Global casino VIP revenue performance in the first quarter was helped by strong results in Cambodia – where VIP revenue grew 174 percent quarter-on-quarter to US$81 million – and in Saipan. The latter posted VIP revenue of US$177 million in the first three months of 2016, according to the report from Morgan Stanley.
The investment bank added that Cambodia should post the highest VIP revenue growth rate worldwide for full-year 2016, at 39 percent.
The document – which involved seven Morgan Stanley analysts based in different international markets – noted that the “VIP market outside Macau is gaining relevance”. Estimates included in the report indicate that Macau’s contribution to global VIP business dropped from 80 percent in 2012 to 65 percent in 2015.
VIP baccarat gross gaming revenue in Macau – the city’s main gauge for VIP performance in the casino segment – slipped 19.3 percent in the first three months of 2016 compared to the prior-year period, to MOP30.38 billion (US$3.8 billion), show data from the city’s gaming regulator released in April. But the figure was up 2.7 percent quarter-on-quarter.
“We expect global VIP revenue to decline 8 percent in 2016 and then grow by 3 percent in 2017, but revenue outside Macau should grow faster, at 6 percent and 8 percent in 2016 and 2017 [respectively],” the team of Morgan Stanley analysts stated.
They added: “Lapsed junket agents and customers in Macau have returned since October 2015 with fresh capital, and junket consolidation helped larger junkets grow the business. Regions outside of Macau are being helped by new casino openings (Vladivostok and Saipan) and better junket terms.”
Morgan Stanley stated that VIP revenue in Macau should decline by 16 percent in full year 2016, reaching stabilisation – i.e. zero growth – in the following year.
Singapore is expected to post a 10 percent annual decline in VIP revenue in 2016, followed by growth of 12 percent in full-year 2017. According to the investment bank, the city-state remains the second largest VIP market in Asia (and worldwide), only behind Macau: Singapore generated US$323 million in VIP revenue in the first quarter of 2016.
In its Wednesday report, Morgan Stanley raised its Philippines VIP revenue growth forecast for full year 2016 to 18 percent, from a previous estimate of 14 percent. The investment bank stated that VIP revenue in the country was US$153 million in the first quarter of 2016, down by 5 percent quarter-on-quarter.
“We expect the ban on phone betting in Macau to benefit the Philippines VIP market,” Morgan Stanley stated.
On May 6, the Macau government announced that the use of telephones by those sitting at VIP gambling tables would be banned with effect from May 9.
Use of telephones at tableside can facilitate what is known in the industry as “proxy betting” whereby a gambler not physically present in the gaming room can communicate via telephone or other digital device to instruct a “proxy” sitting at the table – usually a junket representative – to make a bet on the person’s behalf.
The Macau ban on telephone use at gaming tables was seen by the industry as a de facto ban on proxy betting. Although proxy betting was not officially allowed by the regulator, industry insiders say it was a regular practice in Macau prior to the May ban.
According to brokerage Daiwa Securities Group Inc, proxy betting’s contribution to overall Macau VIP betting volume had grown year-on-year in 2015.
Regarding other Asian markets, Morgan Stanley expects VIP revenue in South Korea to decline by 3 percent this year, to US$1.01 billion. In Malaysia, VIP revenue should increase by 13 percent during the same period, to US$880 billion, according to the investment bank.
Jan 19, 2018Two Macau residents have been arrested by the city’s Judiciary Police (PJ) in connection with a criminal complaint that casino chips with a face value of nearly HKD47.9 million (US$6.1...
Dec 29, 2017It could be 2024 before a casino resort is opened in Japan,...
Dec 27, 2017The year 2017 could prove to have been a turning point in...
Oct 25, 2017The deployment of radio frequency identification (RFID)...
Estimated net worth of Lui Che Woo, founder and chairman of casino operator Galaxy Entertainment Group, according to Forbes’ latest ‘Hong Kong’s 50 Richest People’ list