Macau Casino Revenue Tops Expectations, July Marks One-Year Winning Streak

Posted on: August 1, 2017, 01:00h. 

Last updated on: August 1, 2017, 12:34h.

Macau casino revenue is up for the 12th straight month, with July gross income totaling 22.9 billion patacas ($2.86 billion). That’s a 29 percent premium on the same month in 2016, the biggest monthly gain during the yearlong surge.

Macau casino revenue July
Macau casino revenue is up yet again, but casino stocks are remaining relatively flat. Image: Luxury Style Magazine)

The median forecast for July from gaming and financial analysts compiled by Bloomberg showed an anticipated 26 percent growth. The three percent bonus is added icing on the cake.

Wealthy VIP gamblers returning to Macau are being credited for the boost. At $2.56 billion, last month tied for the most money taken in by casinos during the 12-month winning streak. July’s Macau casino revenue improves on a successful June, which saw gaming rise 26 percent.

The Chinese territory is coming off of two years of revenue declines after the federal government moved in to crack down on junket operators. It’s suspected that VIP touring companies assisted affluent mainlanders in moving their money to Macau, a former Portuguese colony that was designated a financial tax haven when it became part of the People’s Republic in 1999.

To help combat the flow of money, casinos were forced to implement facial recognition technology and set withdrawal limits on ATM machines.

Reaction Mixed

Casino stocks trading on the Hong Kong Stock Exchange didn’t respond as positively as a 29 percent hike might be expected to generate.

Wynn Macau was up only a half of one percent, and MGM China Holdings was the big winner at just 1.3 percent.

The rest of the “Big Six” Asian casino conglomerates fell. Sands China, Las Vegas Sands’ Macau subsidiary, lost 0.55 percent. Investors also sold Melco International (-0.65 percent), Galaxy Entertainment (-1.34 percent), and SJM Holdings (-0.64 percent).

The sluggish response highlights the vulnerability persisting in the region.

Chinese President Xi Jinping has seemed to slow his anti-corruption campaign, which should relax some of the restrictions imposed on junket companies bringing high rollers from the mainland to Macau. However, some analysts believe the revenue increase isn’t so much due to a rush of returning VIP players, but a stronger hold percentage on the casinos’ part.

“We continue to voice caution about the strength (and volatility) surrounding VIP,” Bernstein analyst Vitaly Umansky said in a note. “High hold rates in VIP, along with continued volume strength, creates volatility and lack of ability to more accurately forecast the monthly trend.”

VIP Problems

Two of the region’s largest junket operators, Suncity and Neptune, both recently issued alarming reports. Earlier this month, Suncity told its employees to take extra caution when moving customers from the mainland, and Neptune announced this week that Sands has terminated its relationship at The Venetian.

VIP companies work in conjunction with casinos. The junkets often operate high roller rooms and tables inside the resorts, but Sands says Neptune is no longer welcomed.

Sands declined to comment on why it was severing ties with Neptune. But some resorts have refocused their strategies away from the VIP to more of the mass market. Visitation will ideally improve to Macau’s Las Vegas-styled Cotai Strip due to the June opening of a ferry terminal.

Cotai is where most of the mega-resort construction is currently taking place. Sands’ Parisian opened last year, as did Wynn Palace. MGM Cotai is expected to open later this year.