Casino operators in Macau are taking on the opportunity of shifting table supply to more profitable premium mass floors, which could explain some of the VIP softness in May, says U.S.-based Telsey Advisory Group.
Macau’s casino gross gaming revenues for May reached MOP32.35 billion (US$4.05 billion), a year-on-year increase of 9.3 percent. May revenue grew by the slowest in four months.
“Overall mass revenues grew 36 percent in May, up from 34.3 percent growth in April, with all operators reporting solid growth in the month,” the research house said in its latest report following a trip to Macau.
Premium mass-market players use bets measured in many thousands of Hong Kong dollars per hand. 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.
“For the second month in a row, VIP volume was nearly flat, while the mass market shows no signs of slowing,” Telsey Advisory Group said.
“The VIP market weighted on results in May, with overall volumes down 1.4 percent over last year, with slightly lower hold leading to a 1.8 percent decline in win,” said the research house.
“We believe that VIP softness can be attributed to operators shifting table supply to mass floors, while weather and the confluence of one-off events also likely had a notable impact,” it added.
The research house said the mass market shows more uniform benefit to casino operators, especially for larger market players.
Sands China Ltd, Galaxy Entertainment Group Ltd and SJM Holdings Ltd all posted “healthy year-over-year gains, while the other three concessionaries saw year-over-year declines in gross gaming revenue (GGR),” said the report.
Telsey Advisory Group said it remains bullish on the long-term prospects of the Macau market. “From our recent conversations with casino operators, we see no signs that recent media and regulatory concerns have disrupted the market,” it said.
The accumulated GGR total for the year to May 31 is MOP165.87 billion, a year-on-year growth of 15.8 percent.
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"We [estimate] that these illegal [currency exchange] transactions account for somewhere between 50 percent to 60 percent [of Macau's annual gross gaming revenue]”
Managing partner at IGamiX Management and Consulting