December figures cap ‘rocky’ year

Gross gaming revenue (GGR) fell a precipitous 30.4 per cent year-on-year in December 2014, the biggest single-month drop that Macau has ever posted. The record-breaking drop also contributed to the city registering its first annual fall of 2.6 per cent year-on-year in gaming revenue since the regulator started releasing GGR data in 2005.
The latest data released by the Gaming Inspection and Coordination Bureau (DICJ) on Friday revealed that total casino revenue for 2014 had declined to 351.5 billion patacas from the 360.7 billion patacas of 2013. Meanwhile, in December, the casinos only took in 23.3 billion patacas, compared to the 33.5 billion patacas of 2013.
The unprecedented monthly drop in December may have been driven by declining revenue in the mass gaming market in addition to that in the VIP sector.
Credit Suisse analysts Kenneth Fong and Isis Wong estimate that VIP revenue had dipped by between 37 and 40 per cent year-on-year while mass revenue may have also dropped by between 13 per cent and 19 per cent year-on-year in December, claiming the ‘sharp revenue deceleration in mass market is likely to be a negative surprise to the market and drive another round of re-rating.’

No immediate recovery

The analysts believe that the stricter enforcement of transit visa rules and the strengthening supervision of the industry called for by President Xi Jinping during his visit to Macau in December may continue to weigh on revenue recovery.
As such, despite expecting the drop in GGR to narrow to between 14 and 18 per cent year-on-year this month given the lower comparison base set by the Chinese New Year period, the two analysts believe that the decrease in GGR could subsequently widen again in February, resulting in GGR possibly dropping by more than 20 per cent between the first two months of 2015.
In fact, the annual drop in GGR for 2014 had been predicted by one gaming operator. At the beginning of December 2014, chief executive of SJM Holdings Ltd, Ambrose So Shu Fai, said that he thought that the GGR for 2014 might decrease compared to 2013, believing, like Credit Suisse, that the anti-graft campaign of the central government would continue to depress the numbers of VIP gamblers.
In addition to the anti-corruption policies which are believed to be driving high-rollers away from Macau, other polices such as visa restrictions, UnionPay restrictions and mass floor smoking ban are also seen as factors slowing down the gaming industry.
However, the chairman of MGM China, Pansy Ho Chiu King, said last month that she perceived that the consecutive drops of GGR in 2014 were ‘normal’ as it had been rising by double digits for almost a decade.
On the other hand, the new Secretary for Economy and Finance, Lionel Leong Vai Tac, remarked recently that the economy is undergoing an adjustment phase in which declining gaming revenue and resultant taxes would continue to be apparent.

Unsurprising result

The annual drop of GGR for 2014 had also been foreseen. Monthly GGR had started turning south in June 2014, by decreasing 3.7 per cent year-on-year, igniting the following consecutive drops. In July and August, the decrease in GGR remained in single digit territory – down by 3.6 per cent and 6.1 per cent year-on-year, respectively.
However, double-digit falls followed in September, when GGR decreased by 11.7 per cent year-on-year. In October and November, GGR tanked 23.3 per cent and 19.6 per cent year-on-year, respectively.
These drops in monthly GGR during the five months had actually brought the Asian gaming hub to see its accumulative GGR in the first eleven months of 2014 almost flatten – up only 0.3 per cent – compared to the same period in 2013.
Nevertheless, according to DICJ data, Macau had experienced longer consecutive drops in GGR before. Between December 2008 and June 2009, GGR decreased for seven consecutive months following the financial crisis in 2007 and 2008. Nevertheless, the respective annual GGR of 2008 and 2009 still posted positive growth.

SJM leads annual market share

In terms of market share, gaming operator SJM Holdings Ltd., founded by Stanley Ho Hung Sun, has resumed its lead, closing 2014 with a slightly higher share of 23 per cent, according to figures compiled by Portuguese news agency Lusa.
In second place came Sands China, owned by U.S. tycoon Sheldon Adelson, with a share of over 22.5 per cent. Galaxy ended last year with a market share of close to 21 per cent.
In the second half of the table, Melco Crown, of which a major shareholder is Lawrence Ho, son of Stanley Ho, continued the trend of the year to finish fourth, with a share of slightly over 13 per cent, followed by Wynn, almost three points behind.
In last position, despite being very close to Wynn, MGM China, chaired by Pansy Ho, daughter of Stanley Ho, closed 2014 with an annual market share of slightly above 9.5 per cent.
In December 2014 alone, SJM led with a share of over 23.5 per cent, followed by Galaxy and Sands China with market shares of around 20 per cent, with about half a percentage difference between them. The second half of the table was led by Melco Crown with almost 15 per cent, followed by MGM China with almost 10.5 per cent and Wynn with just over 10 per cent.
with Lusa