Macau casino gaming revenue decline may fall into “trough” in October


macau-casino-revenue-troughMacau casinos’ ongoing revenue slump is stretching from months to quarters. Macau is currently riding a four-month long spate of declining revenue, with all expectations that October will make it month number five when the final numbers are tallied.

Late last week, Macau’s Gaming Inspection and Coordination Bureau (DICJ) revealed that revenue in the three months ending September 30 had fallen 7% year-on-year to MOP 82.86b (US $10.37b). That’s also down nearly 9% from the MOP 90.9b Macau generated in Q2, which was itself 11% down from Q1’s MOP 102.2m, which was down from Q4 2013’s MOP 107.4b. Sense a pattern yet?

In keeping with individual operator earnings reports, the biggest fall was seen in VIP baccarat. High-roller baccarat revenue fell 19.1% year-on-year to MOP 46.8b, accounting for 56.4% of the quarterly total, the first time the VIP sector has accounted for less than 60% of the pie. Conversely, mass market baccarat revenue shot up 16% to MOP 27.74b. Slots added MOP 3.75b in revenue, up about 3% from Q2. The number of gaming tables in action at the end of Q3 was 5,697, just 13 less than at the end of Q2. The number of slots fell 311 to 12,584.

As usual, Macau’s gambling also-rans struggled for their moment in the spotlight. The Macau Slot sports lottery generated MOP 194m ($24.3m) in Q3, of which MOP 165m came via football and MOP 29m from basketball. The Macau Jockey Club reported MOP 56m in pari-mutuel revenue, while the Canidrome’s greyhounds added another MOP 37m.

The current consensus for October’s monthly revenue tally is to come in anywhere from 18% to 30% lower than the year before. Of course, the comparison is slightly skewed given that October 2013 reported a then-record MOP 36.5b ($4.57b), so this October was already punching uphill. Wells Fargo analysts attempted to find the silver lining by reporting that revenue in the second week of October fell 30% from the previous holiday Golden Week’s total, which was better than the 36% decline following 2013’s Golden Week.

Analysts at JL Warren Capital said 2014 will likely go into the books with zero annual growth, the first time the yearly total has failed to increase since Macau began compiling such statistics in 2002. In fact, the lowest annual growth on record is 2005’s 8.3%. Since then, only the post-recession 2009’s 9.6% has failed to offer double-digit growth.

Deutsche Bank suggested October’s expected VIP decline may well represent the “trough” i.e. low-water mark and that the statistical ugliness may improve in November, given November 2013’s low 2.9% VIP win rate. For the record, DB’s Karen Tang was suggesting this statistical wizardry was likely only sufficient to limit November’s expected VIP revenue decline to the 15% to 18% range. So, er, yay?