Macau casinos could be headed for their second worst month in five years if current trends continue.
Macau casinos have been mired in a 14-month long gaming revenue slump, but the rate of year-on-year decline has slowed in recent months, leading some operators to cautiously voice the opinion that some kind of ‘bottom’ had been reached.
Think again. Unofficial reports from Macau casinos over the first half of August have analysts reducing their estimates for the month’s revenue potential. Sterne Agee analysts had been expecting a year-on-year decline of between 30% and 34%, slightly better than July’s 34.5% decline. But they believe gross gaming revenue fell 39% in the first two weeks of August, forcing them to reduce the month’s estimate to a decline of between 33% and 37%.
Wells Fargo also cut its estimates to between 36% and 38%, while Sanford Bernstein Research split the difference, calling for a 37% monthly decline. Collectively, projections are for Macau to record revenue of between MOP 17.5b and 18.4b (US $2.2b – $2.3b). That’s only a whisker above the MOP 17.4b Macau reported in June, which marked the lowest gaming revenue tally since November 2010.
The causes of August’s decline include VIPs getting luckier at Macau’s baccarat tables, but UBS Securities analysts maintain that the jurisdiction’s “underlying trends remain quite lackluster.”
UBS also warned that Macau’s government could be compelled to introduce delayed austerity measures to offset the decrease in gaming tax revenue. Macau’s government collected MOP 51.9b in gaming taxes between January and July, down over 35% from the same period last year. This year’s gaming contributions represent 80.5% of the government’s total tax take.
NO HUMAN WAVE OF UNEMPLOYED VIP ROOM STAFF?
The VIP market has been hardest hit during Macau’s lengthy swoon, yet Macau’s Labor Affairs Bureau claims that it has received just 61 applications for employment aid from laid-off VIP room workers since December, and 17 of these applicants have already found new jobs. On Saturday, Bureau deputy Lau Wai Meng told reporters that “re-employment for these laid-off staff is not difficult, with most of them later hired in a related industry.”
Such stats would seem to poke holes in claims by junket operators that employment Armageddon was at hand, claims that seemed justified given the number of junkets that have closed up shop and the VIP rooms that casinos have closed. Yet Macau’s Statistics and Census Service reported the number of individuals employed by the local gaming industry had fallen by 800 to 83,800 from Q1 to Q2 2015, so who’s telling the truth, here?
SANDS SHIPPING WORKERS OFF TO SINGAPORE
Maybe all those missing workers have gone to Singapore. Sands China recently announced that it was giving its Macau casino dealers the opportunity to work at its Marina Bay Sands property in Singapore. The program, which was developed with the participation of both jurisdictions’ governments, will see a total of 43 casino staff spend 12 months working as dealers at MBS before returning to their original jobs in Macau.
Sands says the transplanted dealers “will gain valuable overseas experience [at MBS], acquiring a global vision and broadening their career development horizons.” The voluntary program, which was announced in July, originally envisioned up to 100 staff, but apparently – like Macau itself – supply exceeded demand.
