MASS GAMING JITTERS

2014/12/4

From：Macau Business Daily

Deutsche Bank predicts more stormy weather. Mass gaming will post a negative quarter, it claims. For the first time. The smoking ban and table reclassification are two of the catalysts combining to disrupt Q4.

The years of 30 per cent annual growth are gone. The mass market is suffering a reality shock this year and even the new wave of Cotai openings – up until 2017 – is unlikely to change these growth rates from the most profitable segment in Macau.
In the near term, one thing is certain. The mass segment is not immune to the gaming slowdown in Macau. Deutsche Bank predicts that the mass market will post its first quarter of negative results in the last three months of the year. The revenues will decline by 8.7 per cent in the fourth quarter to US$4.039 billion with casinos here making US$400 million less than in the same period last year.
The segment will continue to struggle in 2015 with a recovery likely to happen only in the second quarter of 2015 (a growth of 1.9 per cent). In the first three months of next year, however, the revenues from mass players here will still decrease 3 per cent year-on-year.
“With mass table revenue falling 12.6 percent in the month (December) and with the implementation of the mass gaming area smoking ban, table reclassification activity continues to skew segment results”, wrote the German bank in a report published yesterday.
Las Vegas Sands and SJM continue to be the leaders of the mass market in Macau, with a 31 per cent and 23.5 per cent share, respectively, in the January to November period. These two operators alone account for more than half of mass revenues here.
Even with a ‘red quarter’, the mass segment performance for the year will be saved. Deutsche Bank estimate revenues from mass tables will amount to US$17.8 billion in 2014, 15.8 per cent more than in 2013.
However, in the future, mass revenue growth will be much softer than of late, even with operators moving tables from VIP room to mass floors and new casinos openings in Cotai. The mass segment is reaching maturity.
For 2015, the bank predicts mass revenues will climb 4.7 per cent year-on-year, a third of what’s expected for 2014. For 2016 and 2017, when the new 10 mega-casino projects are online here, the revenues from mass floors will increase 12 per cent, far from the 30 per cent growth rates of the 2011 to 2013 period.
In 2017, with Cotai 2.0 at full steam, the Macau gaming industry will be a 50/50 market between VIP and mass. That year, the former segment is expected to generate US$23 billion in revenues and the latter US$25 billion.
For the overall Macau market, Deutsche Bank now predicts gaming revenues to drop by 1.8 per cent in 2014. This quarter, gross gaming revenues here will drop 21.8 per cent, likely the worst quarter of the current gaming crisis. The VIP segment will suffer a severe blow with revenues plunging 28.9 per cent in the fourth quarter (year-on-year) and 10.8 per cent in total for the year.

Copyright@Macau Business Daily