Gaming | Revenue climbs 10 percent in July, slowdown from Q2

Gross gaming revenue in Macau rose 10.3 percent in July 2018 to reach a total of MOP25.32 billion, according to the latest data from the Gaming Inspection and Coordination Bureau (DICJ). Analysts had broadly predicted a 5 to 13 percent growth for July.

Year-to-date revenue reached MOP175.54 with the inclusion of July, up from just under MOP150 billion in 2017. This represents a year-to-date growth of 17.5 percent, down from 18.9 percent for the first half of 2018.

The latest posting is in line with the months preceding July, suggesting that gaming revenue might have finally found its “new normal”. Certainly, the 10.3 percent rise last month represents a slowdown from the approximately 12 percent growth seen in both May and June, and the growth of March and April, which exceeded 20 percent.

Nevertheless, this July marks almost two years of consecutive, year-on-year revenue gain in Macau, after a deep recession that more than halved monthly revenue.

Citing gaming analysts, Reuters reported that growth in the high-roller VIP segment was flattening out, attributed to a recent tightening of Chinese capital outflows and the impact of the football World Cup. Looking further ahead, a deceleration in Chinese gross domestic product growth might also weaken demand from VIP players.

To offset their exposure, Macau casino operators have been steadily moving toward a business model that places equal importance on both the VIP and mass market segments. The latter is considered more resilient to unexpected market developments, and may help to avoid another prolonged gaming recession on the scale seen in 2014.

Casino operators are also keen to develop the mass market because they can seek out the lucrative “premium mass” cohort, without having to pay out large commissions to junket operators that bring in VIP clients.