Gaming | Fitch Ratings lowers forecast for casino revenue

Fitch Ratings has lowered its 2015 forecast for Macau gaming revenues, citing credit availability and the recent smoking and visa restrictions as contributing factors, news website GMA News reported.
“We believe there is some risk that the visa and smoking rules will become more restrictive, and that new casino openings may not gain the full allocation of table games,” the debt watcher said in a statement, quoted by GMA News.
In addition, Fitch noted that competition for VIP customers is also influencing Macau’s gaming revenues. “We revised the forecast down to negative 22 percent from negative 4 percent. February gaming revenues were down 49 percent on a year-on-year basis, and 18 percent on a month-­on-month basis,” it added.
The global rating agency also said that its revised forecast included March’s estimated 40-percent month-to-date year-on-­year decline, although they’re expecting Macau to perform better in the near future. “We expect some recovery in the coming months, as premium mass and VIP players avoided the New Year crowds in Macau,” the agency said.
Furthermore, Fitch highlighted that revenue from VIP services is booming in other regions: “VIP volume increased by 74 percent in the 2H14 at Echo’s and Crown’s properties in Australia. Echo disclosed that its credit extensions increased 124 percent at its Sydney property in that quarter. NagaWorld in Cambodia grew its VIP volume in 2H14 by 47 percent. Much of the growth came from China.”
Fitch added that the revision could also be attributed to some operators outside Macau who are more aggressive in direct lending. For instance, the agency recognized that lower gaming tax rates recorded in Australia and across South-East Asia “allow higher VIP junket commissions relative to Macau.”