Gaming | Analyst : GGR won’t recover before 2020

Grant Govertsen

Analyst Grant Govertsen has predicted that Macau’s gross gaming revenues (GGR) are unlikely to return to their pre-recession levels before the current concessionaire agreements end between 2020 and 2022.

Speaking on the sidelines of the MGS Show and Summit last week, Union Gaming’s Govertsen told the Times, “it’s going to be well after the concession expiration period before we reach peak revenues again.”

“However, given the mix of revenues and how mass market is stronger than VIP, we should get back to peak profitability much before peak revenue,” the gaming analyst added. “That could be within the next handful of years versus many years for revenue.”

Macau GGR reached its peak in February 2014 with the region’s six gaming operators recording a combined MOP38 billion. Then the MSAR entered a period of continuous decline with monthly revenues falling to a low of MOP15.88 billion in June 2016, before the recovery started.

October 2017 revenue amounted to MOP26.63 billion, up 22.1 percent from the same month in 2016. That means that gross gaming revenues today are still only 70 percent of pre-recession levels.

“I think that the growth we are seeing now is temporary,” warned Govertsen. “You have to remember that the VIP market was shrunk so much that it doesn’t take much to get a big bounce and that’s what we are seeing now.”

Accounting for more than 85 percent of Macau’s gross domestic product, the 2014 casino downturn sent the whole economy into free-fall. In a matter of five years, Macau went from being the world’s fastest growing territory to its fastest receding.

Asked about future risks that could endanger the city’s economy, Govertsen said that nothing specific was on the horizon. However, he cautioned that “if VIP continues to grow at 30 or 40 percent in perpetuity, then that would raise some eyebrows and potentially result in some form of tightening.”