The high roller is no longer king in Macau
Source: The Standard, Sing Tao Media Corporation
January 14th, 2006
The high roller is no longer king in Macau.
The city's casinos took in less last year from VIP baccarat tables, long the industry's main source of revenue, than
the year before, according to data published by the Macau Gaming Inspection & Coordination Bureau. Not that Stanley
Ho and his gaming rivals are hurting. Macau casino revenue for the year rose 11.3 percent to 44.73 billion patacas
(HK$43.43 billion), due almost entirely to growth in play at public baccarat tables.
This shift to reliance on the mass market represents a crucial stage in the transformation of the city into an entertainment
center that might one day live up to its hype as an Asian Las Vegas - and could justify the billions that US and
Hong Kong-based casino firms are pouring into building massive resorts that could never hope to live on the take
from high rollers alone. In the short run, however, it also means that Macau's casinos will fall short of analysts'
earlier exuberant forecasts that they would overtake their Las Vegas Strip peers in 2005 as the world's top performers.
Strip casinos, according to Nevada Gaming Control Board figures, generated US$5.54 billion (HK$43.21 billion) in
gambling revenue between January and November and consistently generate at least HK$3 billion in revenue a month.
Macau is yet to release results for December, but the quarterly and annual data imply that the take was 3.75 billion
patacas, up 10.8 percent from a year earlier. The shift in focus was evident in the increase in 296 gaming tables
and 1,167 slot machines during 2005, primarily at existing operations. Just two casinos opened, both in the first
"The Las Vegas experience tells us that opening new casinos is very important for growth," said Core Pacific- Yamaichi
senior economist Kent Yau.
The pace is picking up this year. The HK$2 billion Grand Emperor casino opened last week and the expanded Diamond
Casino in the Holiday Inn Macau will reopen next weekend. Later this month the Rio casino is also set to open. Partly
as a result of the new gaming venues, both Yau and Gabriel Chan of Credit Suisse First Boston expect the Macau market
will grow by about 15 percent this year. Jonathan Galaviz, Asian gaming partner at Las Vegas research firm Globalysis,
is even more upbeat. "We believe that Macau will go to approximately US$6.8 billion in 2006," he said, a growth rate
of 21.4 percent.
"We believe that market performance from September to December 2006 will make it a banner year for Macau as the Wynn
Macau opens in September as the first Las Vegas-style integrated resort in the market."
CLSA forecasts total 2006 Macau casino revenue at US$7.22 billion, implying 28.9 percent growth, rivaling a dizzying
44.3 percent expansion rate in 2004. The US$1.1 billion Wynn isn't the only big casino opening. Galaxy Casino announced
Thursday the completion of the superstructure of the HK$2.5 billion Galaxy StarWorld, set for an August opening.
Galaxy will also open the Grand Waldo casino this quarter. Stanley Ho's Sociedade de Jogos de Macau, the dominant
operator, will open the HK$3 billion Grand Lisboa, the HK$1.5 billion Crown Macau and the casino portions of the
HK$2.4 billion Ponte 16 and HK$1.9 billion Fisherman's Wharf projects as well. With the major projects not opening
until late in the year, Deutsche Bank analyst Karen Tang expects average annual growth of 20 percent through 2008.
As the mass market becomes dominant, Core Pacific-Yamaichi's Yau expects the VIP baccarat share of the overall market
will fall below 60 percent this year from 62.7 percent in 2005 - and 77 percent in 2003. So far, the biggest beneficiary
of the shift has been the Las Vegas Sands' Sands Macau casino, though this should change with Wynn Macau. Yau believes
the decline in high rollers may be exaggerated, since some of them are simply shifting to the public tables rather
than being steered to the VIP tables by junket agents. Analyst Marc Falcone of Deutsche Bank has suggested that China's
crackdown on gambling may have also depressed VIP figures.
Copyright © 2006 The Standard, Sing Tao Media Corporation.
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