CASINO

Macau revenue rises 11.5% in February; MGM China breaks ground on Cotai

TAGs: Macau, mass market, MGM China, Pansy Ho

mgm-china-groundbreaking-macau-revenueThe Macau Gaming Inspection and Coordination Bureau says February’s gaming revenues rose 11.5% year-on-year to MOP 27.1b (US $3.4b). February’s numbers benefited from the lunar new year celebrations, which fell in January last year (Jan. 2012 revenues were $3.13b). Two months into 2013, gaming revenues are up 9.4% over last year and CLSA analyst Aaron Fischer is maintaining a 9% annual growth rate prediction. February featured wild swings in the performance of the mass market and VIP gambler segments, with VIPs giving Macau a wide berth until the mass market hordes that descended on the gambling enclave for the new year celebrations had left for home.

MGM China, which broke ground this week on its second Macau casino – its first on the Cotai Strip – has certainly benefited from the increased clout of the Chinese mass market. In conversation with analysts following the release of MGM Resorts’ annual earnings report, CEO Grant Bowie said main floor table games and slots now accounted for approximately 60% of MGM China’s earnings, up from 50% in 2011. Bowie said he expects this “positive trend” to continue, driven by product upgrades and marketing efforts. MGM’s new $2.6b Cotai facility plans to offer 500 gaming tables, 2,500 slots and 1,600 hotel rooms when it opens in 2016.

During Wednesday’s groundbreaking ceremony on Cotai, MGM China minority shareholder Pansy Ho said such new facilities would help accelerate Macau’s mass market growth. “The VIP market grew faster than the mass market in the beginning purely because there were insufficient infrastructure and facilities to support” mass market development. But Ho doesn’t expect the VIP market to undergo any sudden drastic change. “What you will see is the growth of the VIP business might not be maintained at double digits.”

Ho was also asked to comment on rumors that China’s Communist Party leaders were planning a crackdown on junket operators feeding high-rolling gamblers into Macau’s VIP rooms. These rumors got a boost this week after mega-junket Neptune Group was linked to disgraced Party official Bo Xilai by a mainland magazine. Ho acknowledged that such a crackdown would “absolutely” impact MGM’s bottom line, but she reminded the media that they themselves were the sole source of the crackdown rumors and there hadn’t as yet been “any real concrete and clear indication” that the government was actually planning anything of the sort.

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