Macau casino revenue posted a year on year increase in Q3 2016 despite another decline in the VIP segment. As per the data released on Monday by Macau’s Gaming Inspection and Coordination Bureau (DICJ) show overall gaming revenue of MOP 55.2b(US$6.9b) in the three months ending September30. This is 3.9% higher than the same period last year, when the marker reported a 34.3% year on year decline.
This year casino industry here in Macau still witnessed decent gains despite of VIP baccarat revenue falling 1.2% to MOP 28.6b (US $3.6b). The VIP share of Macau’s overall gross gaming revenue came to 52.1% down from 53.3% in Q3 2015. However this figure is still better than the low of 51.5% recorded in Q2 2016.
Last month a grand opening of Las Vegas Sands $2.7 billion Parisian was an indication of the much needed good news for the former Portuguese colony. With this launch combined with the opening of Wynn palace last month, was the territory’s first winning month in more than two years and the bullish sentiment among investors towards Macau now sends a clear message that the territory has returned to form for gambling business in a strong way. However among all this the fate of VIP play in Macau remains to be a big question. VIP gaming in Macau has largely dominated the top line numbers here at the 38 casino properties. VIP play which used to account for 60% of the island’s total gambling revenues is down from 70 percent in 2014 and has continued to decline in spite of the total casino revenue going up.
Some properties now have completely written off VIP gaming until the conditions change. As per an analyst at Stifel, Steven Wiesczynski stated that MGM’s upcoming property in Cotai which is slated to open in 2017 “will open with a strictly mass only gaming floor until management feels there is enough demand to start adding premium mass or VIP tables.”
As per a report submitted by Morgan Stanley which states that there are strong indications of VIP not coming back anytime soon. It says: We think casinos and junkets earn higher margins from VIP business outside of Macau,” “We think outside of Macau will continue to gain share given lower effective tax rate, easing visa policy for Chinese outbound tourists, improving infrastructure and player anonymity, driving higher profitability for junkets/casinos.”
