Gross revenues from Macau casino games for the third quarter of 2014 fell 7 percent year-on-year to approximately MOP82.86 billion (US$10.37 billion) compared to the MOP89.19 billion tally in the third quarter of 2013. Revenue fell by 8.8 percent from the previous quarter.
The official quarterly numbers – some of them broadly anticipated in investment analysts’ unofficial estimates – were released on Thursday afternoon by the city’s gaming regulator, the Gaming Inspection and Coordination Bureau.
The decline in revenue from VIP baccarat was 19.1 percent year-on-year, to MOP46.77 billion, compared to MOP57.79 billion a year earlier. VIP revenue accounted for 56.4 percent of all casino gross gaming revenue (GGR) for the quarter, the first time it dropped below the 60-percent mark.
But mass-market revenue rose 16 percent year-on-year in the three months to September 30, to MOP27.74 billion, compared to MOP23.83 billion in the year earlier period.
“This is the lowest VIP mix – by a wide margin – since the liberalisation of gaming in Macau,” analysts Grant Govertsen and Felicity Chiang of Union Gaming Research Macau Ltd said in a note on Thursday.
“As the combined high-margin business of mass market tables and slots continues to grow (15 percent year-on-year growth this quarter), which we think should be largely sustainable over the coming years, the revenue mix shift towards mass market should continue,” they said. “However, when the VIP market recovers, we would expect the mix shift to return VIP to a 60-percent plus share.”
Macau’s casinos have seen four consecutive months of declines in gambling revenue since June, which analysts have blamed on a combination of supply side factors and demand side ones.
VIP revenue declined between 14 percent and 17 percent year-on-year in July and August, according to Karen Tang of Deutsche Bank AG. “In September, junket rolling declined 25 percent year-on-year, the largest decline since January 2009, further highlighting a demand problem,” Ms Tang said in a note earlier this week.
Overnight on Wednesday, Las Vegas Sands Corp had reported its third quarter results, showing margin pressure in the premium mass segment in Macau.
Sheldon Adelson, chairman of Las Vegas Sands and its local unit Sands China Ltd had told analysts on the earnings call that the companies’ continued “to execute our strategic objectives during this quarter, despite some obvious challenges in the VIP Gaming segment in Asia.”
(Updated at 6.40pm)
