Premium mass market resilient amid regulatory crackdown

Despite concerns over Beijing’s intensified efforts to curb illicit cross-border capital flows, Macau’s premium mass gaming segment has continued to demonstrate remarkable resilience, according to a recent study by Citibank.

The investment bank’s monthly Macau table survey for July 2024 revealed a significant uptick in the number of premium mass players and total wagers observed in the city’s high-limit gaming areas.

Analysts George Choi and Ryan Cheung noted the number of premium mass players increased 61% year-on-year to 575 individuals, while total wagers surged 34% to reach HKD12.2 million.

“Our July 2024 table survey suggests that concerns by some investors about a crackdown on illegal cross-border fund flows and its negative impact on Macau’s gross gaming revenue (GGR) are likely overstated,” the analysts stated in their report.

Choi and Cheung said most of Macau’s high-end players have legitimate means to bring funds into the city, enabling them to place bets as high as HKD1 million per hand.

Their on-the-ground observations underscored this trend, with the analysts spotting 23 players wagering HKD100,000 or more during the survey period – an increase from 19 such players a year earlier.

One particularly notable player was observed at the high-limit area of MGM Cotai, wielding a HKD6 million chip stack and placing bets of up to HKD1 million per hand. This marked the second consecutive month the analysts witnessed a player engaging in high-stakes gaming activity.

Beyond the impressive betting volumes, Citibank’s survey also provided insights into the growing adoption of smart gaming tables across Macau’s casino floors.

Galaxy Macau’s Pavilion South room features 43 such technologically advanced tables, while Sands China’s Apex Room at Plaza has equipped all 18 of its tables with smart technology. At The Venetian Macao, 73 of 414 baccarat tables in the mass market area are now smart tables, and Wynn has added six more smart tables at Encore, bringing its total to 30 of 199 baccarat tables.

Choi and Cheung’s findings underscore the continued resilience of Macau’s premium mass market, effectively dispelling concerns raised by China’s crackdown on illicit currency exchange activities.

“We continue to believe that most players in Macau have their own legitimate ways to get their funds over to Macau, sufficient for them to bet as much as HKD1 million a hand,” the analysts stated.

In terms of market performance, Galaxy Entertainment Group Ltd and Sands China Ltd emerged as the top-ranking operators in Citibank’s premium mass survey, collectively accounting for approximately 25% of the total wagers observed. Notably, 11 of the 23 ‘whale’ players spotted were gaming at casinos operated by these two industry giants.

Citibank’s latest Macau table survey paints a picture of a gaming market that remains buoyant, with the premium mass segment continuing to defy the regulatory headwinds imposed by Beijing. Victoria Chan

Casino revenues expected to dip slightly in July: JP Morgan

Macau is expected to generate MOP18.5 billion in gross gaming revenue this month, slightly below the original forecast of MOP19 billion. According to JP Morgan Securities Asia Pacific, the downward revision is attributed to a “slower start to the month.”

“This implies that last week’s run-rate improved 15% week-on-week to MOP635 million per day (from only MOP550 million per day in week 1) as summer holiday demand gradually kicked in,” analysts DS Kim, Mufan Shi and Selina Li wrote in a recent note.

The first 14 days of the month saw about MOP8.3 billion in revenue, or MOP593 million per day, the analysts reported. They also noted that a gradual improvement in casino revenues is also expected following the recent conclusion of the UEFA European Championship.

“This is a little softer than the trends in Q2, but this is a weekly trend that can be very volatile either way and we wouldn’t read too much into the print just yet,” the analysts added.

In terms of the mass market, the current level is between 105% and 110% of pre-Covid levels, while the VIP sector is around the low to mid-20% range.

Authorities expect rising tourism over the summer holidays to boost visitation and hotel occupancy in Macau to pre-pandemic levels, which should further aid the casino revenue recovery from its pandemic lows. VC