Macau casinos drop as analyst says gaming fell 19pct last week

Macau casino shares closed lower in Hong Kong after Deutsche Bank AG said gaming revenue was hurt last week due to a move by junket operators to reduce credit offered to high-end gamblers.
Gross gaming revenue fell 19 percent to 493 million patacas (USD62 million) a day last week, or 18 percent below the average so far this quarter, Deutsche Bank AG analyst Karen Tang wrote in a note yesterday. Junket operators reduced lending after a reported theft at a competitor “prompted others to withdraw deposits from various junkets,” Tang wrote.
MGM China Holdings Ltd. fell 7.7 percent to HK$10.30 by the close of trading in Hong Kong, while Wynn Macau Ltd. fell 5.6 percent. and Galaxy Entertainment Group Ltd. was down 5 percent, SJM Holdings Ltd. dropped 5.8 percent and Sands China Ltd. lost 2.9 percent. The Bloomberg Intelligence Macau Gaming Index declined more than 5 percent to a three-year low.
China’s slowing economy and its relentless crackdown on graft have caused many VIPs to avoid casinos in Macau, and analysts predict gaming revenue will decline by $14 billion in 2015.
Dore Entertainment, which operates at a Wynn Macau casino, said last week an employee is suspected of stealing HK$100 million from it. Police said over thirty other people have filed complaints that they were cheated out of funds amounting to HK$330 million, excluding the junket’s portion.
Macau’s casino regulator said it’s studying new rules following the Dore case, including making junket operators disclose the identity of their directors and collaborators, as well as new requirements such as on capital and shareholdings.
“If tighter junket regulations are adopted, we think the negative initial impact on VIP volumes would be inevitable, driven by the likely accelerating junket room closures,” DS Kim, an analyst at JPMorgan Chase & Co., said. Further downside in Macau stocks should be “fairly limited” however as the VIP segment is no longer a profit driver for the city’s casinos, he added. MDT/Bloomberg