Gaming | May beats analysts’ predictions in 10th month of consecutive gains

Gross gaming revenue (GGR) for the month of May reached MOP22.74 billion (USD2.83 billion), up by 23.7 percent year-on-year and 12.8 percent compared with the previous month, according to data published by the Gaming Inspection and Coordination Bureau.

The result was the second- strongest posting this year after February (MOP23 billion) when most of the Chinese Lunar New Year holiday occurred. It beat out the estimates of several analysts who had forecasted year-on-year growth of around 20 percent.

“Macau May GGR came in better than expectations,” admitted brokerage Sanford C. Bernstein, as reported by GGR Asia.

Other analysts pointed to several factors that may have dampened May’s results, despite the strong showing. Union Gaming Securities Asia said that the visit of Chinese politburo member Zhang Dejiang last month may have discouraged high- rollers from the city.

In an email to the Times, Union Gaming analyst Grant Govertsen said that “the consensus was expecting a greater negative impact as a result of the visit to Macau by the high level PRC official from May 8-10.”

“This impact was likely less than anticipated, hence the better than expected GGR,” he added.

Moreover, the Dragon Boat Festival, which took place this week may have also had a role in attracting a higher number of tourists this year and consequently driving up gaming revenues.

According to the Public Security Police force, Macau hosted more than 404,000 visitors between May 27 and 30, some 9 percent more than in the same holiday period in 2016.

Marking the 10th consecutive month of growth, the performance of the gaming sector last month is a strong indication that the industry is stabilizing.

Union Gaming analysts expect “the growth rate to remain well north of 20 percent […] suggesting the recovery is in full-tilt.” In a note released yesterday, the organization also forecasted a 22 percent increase in GGR for the second quarter of this year and a full-year increase of 14 percent.

The accumulated gross gaming revenue for the first five months of the year was MOP106.38 billion, compared with MOP91.9 billion between January and May 2016, representing an increase of 15.8 percent.

Due to the volatility of Macau’s gaming market, substantial differences are often recorded when making year-on-year comparisons, particularly when major Chinese holidays are concerned. Accumulated gross gaming revenue accounts for this variance by averaging the year- on-year monthly values.

However, in terms of year- on-year growth, May 2017 represented the biggest annual increase in more than three years since February 2014 recorded a 40.3 percent rise.

February 2014 was the peak month for gaming revenues in the territory, when they exceeded MOP38 billion. Last month’s revenue accounts for just 60 percent of that figure, potentially highlighting that there is still significant ‘catch up’ left for Macau casino operators.

Singapore casinos struggle to get gamblers to pay up

A report from business news broadcaster CNBC said that Singapore casinos may have more difficulties forcing gamblers to pay up than Macau operators. Citing figures from Bloomberg, which showed that the number of lawsuits against gamblers had grown from two in 2013 to nearly 50 in 2014, the broadcaster put the respective difficulty down to the number of local junkets. While some 200 licensed junket operators can provide credit to high-rollers in Macau, there are only three legal organizations in Singapore. When gamblers fail to repay their debts, junket operators can struggle financially to cover the losses. With overexposed risk due to the small number of junkets, Singapore casinos are forced to resort to lawsuits to recover the money. Recovering unpaid debts from mainlander gamblers once they return to the People’s Republic of China can be a daunting prospect for junket operators due to the lack of legal means of doing so.