Macau casino gaming revenue drops in October on VIP slowdown

Macau’s casino gaming revenue slumped 3.2% in October, and China’s economic slowdown put pressure on VIP gambling activity.

On Friday, Macau’s Gaming Inspection and Coordination Bureau reported total gaming revenue of MOP26.4b (US$3.27b) in October, down 3.2% from the same month last year. To date, gaming revenue has fallen 1.8% to MOP246.7b ($30.57b).

October’s decline was a modest 0.6% year-on-year improvement in September, but this year it is on track for its first decline in four months after a six-month low. On the plus side, the decline in October is the second lowest this year, following a slipping of -0.4% in March.

Analysts were pinched by the decline in the U.S.-China trade war in October, the negative impact on China’s overall economy and the value of the yuan, and the social unrest that is currently holding Hong Kong. Analysts at Sanford C. Bernstein suggested that macau’s VIP gambling market fell by more than a fifth in October, while mass market sales rose by more than 12%, despite a sluggish year-over-year golden week.

That VIP/mass difference is not entirely bad for Macau casino operators, who derive a much greater net profit from mass market games than VIP, the latter should be shared with junk operators who recruit high rollers to visit Macau.

Macau Casino License’s recent third-quarter earnings report showed profitdes despite overall revenue declines, while Melco Resorts & Entertainment set a new record for mass market tables and slot operations.

Macau’s entire mass market gaming sector surpassed the VIP sector for some time, and mass baccarat revenue slipped closer to pointing to the VIP version in the third quarter. Sanford analysts said they expected “volatility” in the VIP sector to continue in the short term, despite Melco CEO Lawrence Ho’s recent insistence that the company was seeing a “stabilization” in its VIP activities.

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