GGRAsia – Macau VIP rooms targeting lower-end gamblers: Tong

Macau VIP rooms targeting lower-end gamblers: Tong

Mar 22, 2016 Newsdesk Latest News, Macau, Top of the deck

While the ongoing anti-graft campaign from China’s central government is still hurting Macau’s VIP gaming business, many VIP gaming operators in the city have been looking for patrons that can commit to betting up to HKD2 million (US$258,000) per visit, Tony Tong, director and co-founder of Pacific Financial Services Ltd, told GGRAsia.

This type of patron is termed as the “lower-end” of the high rollers; but can usually repay their loans borrowed for betting within two to three months, said Mr Tong. His Hong Kong-based firm runs services including debt collection and risk management.

“For the lower-end of the high rollers, they usually bet hundreds of thousands or up to 1 million or 2 million [Hong Kong dollars] at the table,” Mr Tong said. “For the high-end ones we are referring to those that usually wager more than HKD10 million. But these players are not coming back as the anti-corruption campaign has shown no signs of weakening,” he noted. He was speaking on the sidelines of the iGaming Asia Congress on Monday in Macau.

“Many VIP promoters are looking for the lower-end players, because even if they owe a gaming debt, they can usually repay it in two to three months,” he explained. “They’re more controllable for the VIP gaming operators [regarding debt recovery].”

In Macau, casino gross gaming revenue (GGR) – the performance gauge quoted by the Macau government for the local gaming market – decreased by 35.8 percent in the VIP sector in year-on-year terms in the fourth quarter of 2015 to MOP29.59 billion (US$3.68 billion). That is according to data from the local regulator, the Gaming Inspection and Coordination Bureau. For full year 2015, VIP baccarat revenue was down 39.9 percent from 2014.

“There are [people] that said the business at casinos has started to show an uptick recently, in particular the VIP segment,” Mr Tong remarked to us. But he maintains that the VIP gaming segment in Macau is not going to recover hugely this year.

In a report issued on Monday, Morgan Stanley group noted that the city’s VIP revenue and junket liquidity have stabilised recently “with the help of consolidation and downsizing that should continue in 2016”. But the investment bank maintains its estimate that VIP gross gaming revenue will decline by 16 percent for 2016.

Macquarie Capital Securities Ltd updated on Friday its overall forecast for Macau GGR in 2016. It now expects a 6 percent decline year-on-year rather than the 13 percent it predicted previously, according to a report published on Friday. Macquarie forecasts VIP GGR to decline by 10 percent this year, an adjustment from the previous estimate of a decline of 19 percent.