A recovery of the city’s gaming industry is not on the horizon for the near term as the sector continues to be pressured by the softening Chinese economy and the downturn of junket business that are affecting the rebound of customer spending and visitation, research house Union Gaming posits. “There is little evidence to support that Chinese customers are going to start spending more per visit. Given the economic challenges facing China today, it would seem unlikely that customers will start spending more per visit in Macau,” analysts Christopher Jones and John DeCree wrote. For them, the velocity of operators generating revenues from the mass gaming floor is also affecting the recovery. Claiming the current baccarat win rate of the mass market at 1.25 per cent, they suggest gaming operators should “either increase average bet size or increase the number of wagers or the number of people making wagers over the same period”. “This is Macau’s problem in the near term and where we struggle with seeing a broader recovery in 2016”, they stated. For the junket business, Union Gaming expects the sector to get even worse before it begins to rebound, predicting junket volumes will continue to contract next year. “Junket liquidity and the overall number of junket operations in the market continue to contract and consolidate. Adding to these existing challenges, we believe heavier oversight on junket operations will take hold in Macau in early 2016,” it reports. The research house estimates that the city’s gaming revenues would post a year-on-year decrease of some three per cent for next year, forecasting that VIP revenues may drop by around 12 per cent year-on-year. However, it expects that the mass market and electronic gaming machines will increase by some 6 to 7 per cent and 9 per cent year-on-year, respectively.
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