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Gross gaming revenue plunges 3.2% despite recording strongest month

Macau’s gross gaming revenue recorded a 3.2% year-on-year decrease in October to MOP26.43 billion, recording its highest level in 12 months.




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Macau’s gross gaming revenue recorded a 3.2 per cent year-on-year decrease in October to MOP26.43 billion ($3.28 billion), according to official data released on Friday, recording its highest level in 12 months.

Gross gaming revenue in October 2018 amounted to MOP27.32 billion.

The drop was in line with analyst estimates after revenue reached the lowest level in a year in September, where revenue tumbled 8.6 per cent year-on-year to MOP24.26 billion ($3 billion).

The latest data released by the Gaming Inspection and Coordination Bureau shows a contraction of 1.8 per cent year-on-year for the first 10 months of 2019, showing further weakness amid China’s economic slowdown.

Year-to-date revenue tallied MOP246.74 billion from MOP251.38 billion.

October is typically a strong month due to the seven-day Golden Week holiday in China, and thus the level for October was the highest in 2019.

However, the 11 per cent gain in visitors over the holiday period this time was markedly lower than last year’s 19 per cent rise.

The latest GGR numbers suggest a challenge remains for casino operators as growth in the mass segment failed to make up for the slack in the volume of high rollers who are staying away.

JP Morgan Securities (Asia Pacific) Ltd analysts DS Kim, Jeremy An and Derek Choi remarked in a Friday note, “We estimate VIP GGR fell about 20 per cent year-on-year while mass grew low-teens year-on-year, pretty much in line with third-quarter trends.”

Meanwhile, Brokerage Sanford C. Bernstein Ltd then predicted that the preliminarily estimated November GGR would be “-6 per cent to -3 per cent year-on-year.”

Bloomberg’s recent estimate was a 5 per cent GGR decline.

“We continue to voice caution about the volatility surrounding VIP,” said Sanford Bernstein analysts Vitaly Umansky, Eunice Lee and Kelsey Zhu.

The SAR’s revenue has been pressured by myriad negative factors including the trade war, a weakening yuan, social unrest in Hong Kong and regulatory uncertainty over high-roller junkets.

Analysts were expecting Macau’s casino business to strengthen in the second half of the year, owing to an easier comparison base. The outlook has recently darkened as China’s moves to clamp down cross-border gaming have squeezed liquidity for the junkets and hurt the VIP segment.

Late last month, Brokerage Sanford C. Bernstein revised its forecast for October’s gross gaming revenue upward by 3 percentage points. According to Macau Daily Times, analysts at the firm said they expect gaming revenue for the month to contract 3 per cent in year-on-year terms.

Analysts at Nomura previously said that gross gaming revenue for October “should settle around MOP27 billion,” adding that VIP volumes were tracking as much as 20 per cent lower last week than in the same period last year.

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