Casino revenue posts decline in June amid World Cup

2014/7/2

From：Macau Business

Macau’s casino revenue fell for the first time in five years last month as the soccer World Cup diverted some bettors in the world’s largest gambling hub.
Total gross gaming revenue dropped 3.7 percent to MOP27 billion (USD3.4 billion) last month, the first decline since June 2009 when it fell 17 percent, according to Macau’s Gaming Inspection and Coordination Bureau. This compared with the median estimate of a 4 percent decline from nine analysts surveyed by Bloomberg News.
“We expect gross gaming revenue growth to return to positive in the second half of 2014 after World Cup in June and July,” Billy Ng, an analyst at Bank of America Merrill Lynch, wrote in a report yesterday. Revenue will rebound in July to MOP30 billion, 2 percent higher than a year earlier, Ng wrote.
Casinos in Macau rely on high rollers brought in by junket operators for more than 60 percent of revenue. Growth in the VIP segment has slowed as gamblers cut spending amid a cooling Chinese economy and a nationwide crackdown on corruption in China.
High-rollers or VIPs, bettors who usually wager at least HKD5 million ($645,000) per trip, have been shying away from gambling in Macau. “Everybody wants to lay low,” Edmund Lee, a partner at PricewaterhouseCoopers in Hong Kong who specializes in the gambling industry, said in an interview. Those high-stakes gamblers “don’t want to draw unnecessary attention amid China’s anti-corruption campaign,” he said.
China’s President Xi Jinping has waged a campaign against corruption since taking over as Communist Party chief in 2012 and his clampdown on lavish spending have hurt luxury sales from Chow Tai Fook Jewellery Group Ltd. to Gucci bags. The country’s economy expanded 7.4 percent in the first three months of this year, the weakest pace since 2012.
The monthlong World Cup football tournament that started on June 12 had diverted some casino patrons, Phoebe Tse, a Hong Kong-based analyst at Barclays Plc, wrote in a note published June 23. While weak revenue figures could continue to cause concerns for gaming shares, current valuations are “attractive” for longer-term investors, she added.
Meanwhile, the Macau government’s plan to further restrict the use of China UnionPay Co.’s debit cards at casinos also dented money flows to the Chinese city.

Copyright@Macau Daily Times