Macau’s VIP Gambling Market is About to Cry For Help

Macau’s VIP gambling market is in trouble, since the latest figures says, that Macau’s casino gaming revenue fell 34.3% in 2015 and hit an annual low again, since 2010.

As it is seen from the latest statistics released by the Gaming Inspection Coordination Bureau (DICJ), the total casino gaming revenue has decreased by 27% from the last quarter of 2015. This figure was up 1% from the third quarter of 2015.

One of the biggest junkets of Macau’s VIP gambling market, the Neptune Group, has confessed that roughly $130 million were lost until last October and it may be resulted in further negative impacts in terms of impelling junket room shutdowns.

As Cameron McKnight, the analyst of a financial company, Wells Fargo, said to Business Insider: “We remain on the sidelines on the Macau gaming names as estimates and valuations adjust to a ”new normal” of: (1) tighter government oversight, (2) a recovery that is likely to be flatter than prior rebounds, and (3) a weak Chinese economy. As the expert stated, all of them would subsidize a moderated prosperity in terms of yield in Macau’s VIP gambling market.

The Financial Decline of Macau’s VIP Gambling Market Effects Junkets Drastically

In 2014, 16% of all Macau junkets has shut down, due to two main reasons which led to the persistent decline: junket theft liquidity issues and low VIP win rates.

The mass market has the same problems, so it was not able to correct the pattern or make beneficial impacts on the depressed trend of Macau’s VIP gambling market, since the mass revenue was 103b MOP.

Operators and financials are optimist about 2016, based on some estimations the regressive tendency will alleviate this year. HSBC Bank speculate the rate about 16-20%, while others predict more, between 18-22%.

As it is stated by Bloomberg,”Macau’s casino industry has been on a downward spiral since mid-2014, as China’s slowing economy and its campaign against corruption scared off Chinese VIP players and hurt mass-market gambling. These high-stakes punters, typically measured via their favorite card game baccarat, have led the decline since the downturn started.”

Image source: 5oulscape