Revenue at Macau casinos falls by a record 23 per cent in October
Revenue in Macau's gaming halls falls by record 23pc in October as war on graft, smoking ban and Occupy protests in Hong Kong bite
PUBLISHED : Wednesday, 05 November, 2014, 3:21am
UPDATED : Wednesday, 05 November, 2014, 4:55pm
Tiffany Ap [email protected]
Expectations are low for the fourth quarter, especially for VIP players given the central government's announcement of a new anti-corruption office. Photo: AP
The mainland's crackdown on graft, protests in Hong Kong and a ban on smoking indoors combined last month to create a perfect storm for Macau's casino industry, with gross gaming revenue plunging 23.2 per cent year on year to 28.025 billion patacas.
It was the fifth straight monthly decline and the largest on record since the city started collecting data in 2005. But it was in line with analyst forecasts of a drop of around 22 per cent.
On Monday, Macau's secretary for economy and finance, Francis Tam Pak-yuen, warned that the decline would top the previous record set in January 2009, after the global financial crisis, when revenue fell 17.1 per cent. "Although it has already dropped for the fifth consecutive month, we still predict the slowdown of gaming revenue growth will continue for a period of time," Tam said.
The news sent the share price of all casino operators down. Wynn Macau and Melco Crown Entertainment both dropped 3.4 per cent. Sands China fell 3.3 per cent, Galaxy Entertainment Group 2.8 per cent, SJM Holdings 2.3 per cent and MGM China 0.6 per cent. The Hang Seng Index fell 0.29 per cent.
Detailed segment data will be released later this week. The mass market, which had been holding up and grew a robust 15 per cent in September, is expected to have slowed.
A smoking ban was implemented on gaming floors on October 6, and along with pro-democracy protests in Hong Kong, combined to affect the number of mainlanders who like to visit both Macau and Hong Kong.
"Based on our channel checks, we believe growth [in the mass market] was slower in October with single-digit growth year on year possible given some impact on player behaviour from the smoking ban and also a high base from last year," Barclays analyst Phoebe Tse said.
Expectations are low for the fourth quarter, especially for VIP players given the central government's announcement of a new anti-corruption office and preparations for President Xi Jinping's visit to the former Portuguese colony next month to celebrate the 15th anniversary of the handover.
"Prior to the announcement of this new anti-corruption office, our gut feeling was that VIP customers who felt like they were potentially at risk of the current anti-corruption drive had likely already self-excluded themselves from the market," a report released on Monday by China Union Gaming said. "[It meant] that we wouldn't necessarily see VIP trends becoming materially worse from current levels.
"However, the creation of a new high-level office on anti-corruption indicates to us that the broader [anti-graft] drive is far from over and that the greater number of human resources allocated to this department indicates that the number of cases that are prosecuted could continue to grow."
It noted that the number of bribery cases being prosecuted had increased by 31 per cent year on year to 6,500 so far this year.
Chinese gamblers may also be travelling further afield, to gaming destinations such as Las Vegas, to avoid scrutiny.
Wynn Resorts, the parent company of Wynn Macau, said last week that revenue was up 9 per cent at its Nevada properties, which helped offset a 5.6 per cent drop in its Macau operations.
