GGRAsia – Macau 1Q player reinvesting beat GGR growth q-o-q: CLSA

Macau 1Q player reinvesting beat GGR growth q-o-q: CLSA

Jun 11, 2024 Newsdesk Latest News, Macau, Top of the deck

Player rebates and other player reinvestment in the Macau casino market have been growing faster quarter-on-quarter than market-wide casino gross gaming revenue (GGR), suggests a Monday report from CLSA Ltd.

Player reinvestment is commonly identified by brokerages covering the sector as a percentage of GGR, and is sometimes referred to as a ‘rebate’, though the latter term has historically been associated specifically with house rebates on gambling losses experienced by high-value players.

CLSA analysts Jeffrey Kiang and Leo Pan stated: “Competition among concessionaires is intense, as aggregate rebates and reinvestments in players increased 10 percent quarter-on-quarter in first-quarter 2024, to US$1,267 million, faster than the corresponding GGR growth of 6 percent from fourth quarter 2023 to first quarter 2024.”

The institution cited data from Macau’s six casino licensees and its own research.

The brokerage stated: “The rebates represented 18.0 percent of the sector’s GGR in first-quarter 2024”, compared to “17.3 percent in fourth-quarter 2023.”

Its analysts added: “We continue to expect intense rivalry ahead as such investments are essential to drive business – GGR –, in our view.”

In November last year, CLSA had said the first nine months of 2023 saw the Macau gaming sector offer the equivalent of circa US$2.7 billion in premium-player rebates and player reinvestment, or about “17 percent to 18 percent” of Macau’s total GGR of MOP128.95 billion (US$16.03 billion) for the same period.

In a presentation at casino industry trade show Global Gaming Expo (G2E) Asia held in Macau last week, Praveen Choudhary, an analyst at Morgan Stanley Asia Ltd, suggested that reinvesting up to 20 percent of GGR was a “reasonable” way of incentivising so-called premium mass players in Macau. He was referring to people that bet in high denominations but via cash chips rather than the credit-backed, non-negotiable ‘rolling chips’ traditionally used for Macau VIP play.

CLSA stated in its Monday summary that for 2024 and 2025 respectively, it was raising its forecast for Macau-market GGR “by 2 percent to 3 percent, to US$29.8 billion and US$31.7 billion,” as it upped its assumptions for visitor arrivals to Macau.

First-quarter visitor arrivals to Macau totalled circa 8.88 million, up 79.6 percent year-on-year, and 84.8 percent of the same quarter in 2019, indicated Macao Government Tourism Office (MGTO) in a mid-April update.