A year of rebound, with more to come
Macau’s casino revenue jumped 29 percent in July thanks to its VIP players—despite the Mainland Chinese government’s efforts to curtail capital outflows.
According to the city’s Gaming Inspection and Coordination Bureau, gross gaming revenues were up for the 12th straight month in July, increasing a robust 29.2 percent to 23 billion patacas (US$2.9 billion). Bloomberg News reported that the numbers beat the median estimate by analysts who foresaw a 26 percent increase for the month. It is also the biggest gain since February 2014, the news outlet reported.
“Risk of heightening enforcement and potential policy pressures we had flagged have certainly not gone away,” said Daiwa Capital Markets Hong Kong Ltd. analyst Jamie Soo in a note following the results. “Some of the pressure on the gaming revenue does take time to manifest itself, and the seasonal impact of stronger mass numbers for summer months may very well smooth out the potential negative impact of this in the near term.”
Revenue from high rollers, which was first to fall during the decline, soared 35 percent in the second quarter, far more than the 8.1 percent in the market for recreational gamblers, according to the city’s gaming regulator. “The VIP segment, for now, continues to see broad recovery across big and smaller junkets, a trend admittedly well above what we had envisioned,” JPMorgan Chase & Co. analyst DS Kim said.
A year in, however, the recovery is still vulnerable to renewed anti-corruption crackdowns from Beijing government, such as renewed scrutiny on money transfers and junket operators and the addition of facial recognition technology and identification card checks at automated teller machines.
But Union Gaming’s Grant Govertsen says thegaming industry has shown no signs so far of being negatively affected by the new ATM rules. “With July’s above-consensus GGR in the rearview it appears, as we had expected, that there has been no measurable impact from the installation of Know Your Customer measures across Macau’s ATMs,” Govertsen wrote. “We continue to believe that these measures were not put in place to stunt the growth of GGR (VIP or mass), but rather view the measures as generic capital control measures designed to slow a widespread issue of non-casino visitors to Macau coming to the market with the express intention of withdrawing Hong Kong dollars out of their renminbi accounts.”
