Gaming | November on track for steep contraction

November is reportedly on track to become the worst month for gross gaming revenue growth since March 2016. That’s according to analysts at two firms, which predict that the year-on-year growth in gaming revenue could drop to as low as a 13% contraction.
This week, brokerage Nomura said November was on track to record between MOP22.5 billion and MOP23 billion in gross gaming revenue. If correct, the month would prove the second-poorest in terms of revenue after September’s MOP22.08 billion take.
However, when it comes to year-on-year growth, even a best-case scenario looks likely to leave November in last place.
Nomura’s prediction suggests an approximate 9% year-on-year contraction, surpassing the record currently held by August’s 8.6% decline, even as the gross gaming revenue for August stood close to 2019’s monthly average.
Brokerage Sanford C. Bernstein predicted November would fare even worse, estimating that gross gaming revenue would fall by between 10% and 13%, potentially making the month the slowest in terms of growth since early 2016.
Macau gross gaming revenue has faced a difficult year, in part due to the ongoing China-U.S. trade war. Analysts had earlier expected Macau’s casino business to strengthen in the second half of the year, owing to an easier comparison base.
But with Macau’s economy reliant on mainland tourism, and its currency indirectly pegged to the U.S. dollar, the SAR is particularly vulnerable to any fallout between the world’s two largest economies.
The outlook further darkened over the summer as China moved to clamp down on cross-border gaming activities, which squeezed liquidity for the junkets and hurt the VIP segment.
Nomura said that its pessimistic view for November was being driven by a steep decline in VIP gambling volume. Analysts at Bernstein agree, writing that some high-rollers from the mainland are choosing to “delay” visits to Macau amid concerns of “funds movement,” according to GGRAsia.
Both firms predict VIP volumes have declined by more than 30% year-on-year.