Gaming revenue fell 33% to MOP 17.1b (US $2.2b), slightly better than the 36.5% shortfall recorded in August. September’s rate of decline was also the smallest since January, although September’s total is the lowest monthly tally so far in 2015, edging out June’s MOP 17.35b. For the year to date, Macau’s gaming revenue is down 36% to MOP 176b ($22b).
The already suffering local gaming industry was further rocked in September by an internal theft scandal at Dore Entertainment Co Ltd, a junket operator that controls several VIP rooms at Wynn Macau. The original reports listed the stolen sum at around HKD 2b ($258m) although this has since been reduced to a direct theft of HKD 100m from the junket, plus hundreds of millions more that was stolen directly from junket investors.
Whatever the actual number, the theft did a number on Macau’s junket industry, which was already suffering from severely tightened liquidity. Junket investors have been pulling out their money and the depressed VIP sector has led junket giant Neptune Group to publicly muse about getting out of the Macau VIP business altogether.
September is traditionally a slack month in Macau, as gamblers hold their fire in preparation for the Golden Week holiday that kicks off on at the start of October. Analysts will be watching closely to see how much of a bounce – if any – Macau receives from the traditional annual influx of revelers.
Macquarie Securities issued a note this week projecting that Macau would not see a significant recovery until at least 2018. Macquarie noted that the new casino resorts opening on Cotai in the next couple years would boost hotel room capacity by 65%, while slots and gaming table capacity would rise 75% and 21% respectively. This excess capacity, coupled with slackening demand, would put “enormous pressure” on operator margins.
While Macquarie acknowledged that Macau’s dominant position in the Asia-Pacific market remained unchallenged, annual growth between 2014 and 2017 would likely fall around 9%. At the same time, regional markets like the Philippines, Australia and Malaysia are expected to grow between 13%, 10% and 8%, respectively, over the same period, while South Korea would suffer a 1% decline.