Smoking ban will take a big hit on revenues
Alvin Chau Cheok Wa, owner and chairman of Suncity Group Ltd., Macau’s largest junket operator, says the exodus of elite players from the market and the closing of VIP rooms does not bode well for the future of the gaming city.
Speaking to Macau Asia Satellite Television Company, Chau said the slowdown in Macau was “expected” after Chinese President Xi Jinping cracked down on money laundering last year. But unlike some casino operators and industry analysts, Chau says high rollers?always the life’s blood of the gaming jurisdiction?cannot be replaced by mass-market players. Chau also said the weakest performers among Macau’s casinos could close up shop in the wake of Xi’s anti-corruption campaign.
“Won’t they lend to VIPs in Singapore, Korea, even Las Vegas or in Japan in the future? Of course they will,” he said.
Regardless of the slump in high roller play?gross gaming revenue plunged 2.6 percent for the year in 2014, and 30 percent in December alone?Chau told the media outlet that VIPS are still important for Macau. Revenues generated by high rollers have been estimated to account for as much as 80 percent of total gaming revenue.
“If there are no VIP rooms, despite the proportion of the mass market getting bigger, the drop in gaming revenue will remain serious,” he said.
According to the Macau Business Daily, Chau is also pessimistic about the effects of a full smoking ban, which could be mandated by the government and take effect next year. In Macau’s casinos, VIP rooms still allow smoking, and smoking lounges without gaming are also available to players on the main floor. Like a number of industry observers, Chau foresees “at least” a 15 percent drop in revenue when the ban takes effect.
The Macau Gaming Enterprises Staff Association, a unit of the Macau Federation of Trade Unions, has collected nearly 20,000 signatures on a petition to ban smoking in casinos in 2015.
The Las Vegas Review-Journal reported that legislation would include new penalties for violating the smoking ban and would add a 70 percent tax increase on sales of tobacco products.
