Macau | SJM Holdings likely to feel larger impact of 2019 VIP smoking ban - Brokerage

According to brokerage Sanford C. Bernstein, Sociedades de Jogos de Macau S.A. which did not make applications for smoking lounges in any of its properties, will be likely to suffer more setbacks compared to other operators

Macau (MNA) – Sociedades de Jogos de Macau S.A. (SJM Holdings), which did not make applications for smoking lounges in any of its properties, will likely suffer more setbacks compared to other operators during the implementation of a smoking ban in VIP areas that is set to take place on January 2019, according to the brokerage Sanford C. Bernstein.

The brokerage believes that any disruptions caused by the smoking ban will be more apparent on properties that do not have any smoking lounges.

Bernstein notes that in the past, a smoking ban was implemented on the mass gaming tables in October 2014, which had also coincided with a decline of the overall gross gaming revenues (GGR).

However, it is difficult to discern how much of the decline was attributed to the smoking ban as compared to other external factors, such as a macroeconomic slowdown in 2014, and Xi Jinping’s anti-corruption campaign.

Different properties are also likely to fare differently, according to Bernstein.

For instance, properties that were built from 2015 onward are smoke free, namely the following locations: Galaxy Phase 2, Studio City, Parisian, Wynn Palace, MGM Cotai and Morpheus at City of Dreams.

Meanwhile, none of the gaming properties on the Macau Peninsula are smoke-free.

Properties that include VIP smoking lounges are as follows: Wynn Macau, Sands Macao, The Venetian, Sands Cotai Central, The Four Seasons- (Plaza Macao), City of Dreams, Altira, Galaxy Macau, MGM Macau, Grand Lisboa and other SJM Holdings properties.

Properties which have premium mass areas: Star World, Galaxy Macau and The Venetian.

The effects of the VIP smoking ban would cause a disruption of the the customers gaming behaviour, since players would have to leave the gaming table and enter a different room in order to smoke, which might have an effect on the length of play.

The smoking ban might change betting behaviours as well, which means that when customers return from their smoke breaks, they may not bet the same amount that they did prior to to going on their smoke break.

This is specifically pertinent when it comes to baccarat games, (which make up 90 percent of GGR in Macau); customers who participate in such games tend to be superstitious and look for patterns on the board.

If customers had gone off for a smoking breaks while their table had continued dealing, they will not be able to keep track of the patterns that they usually look for.

However, Bernstein notes that the severity of the enforcement of the ban by Macau SAR Government will determine the behaviour of the operators.

However the caveat is that smoking is not something that everyone practices, which might mean that non-smokers might spend more time at gaming tables now that the properties are smoke-free.

Related

Latest