EPA/Aleksandar Plavevski

VIP market immediate solution to combat gaming crisis – expert

Gaming expert Rui Pinto Proença told Lusa on Friday that betting on the VIP market is an immediate solution to combat the crisis that has hit Macau due to the Covid-19 pandemic.

“I think that VIP [high roller] players represent a much higher immediate revenue potential, with fewer people moving around,” said the lawyer from the MdME, one of the areas of expertise of the gaming companies in Macau and the Asia-Pacific region.

“The trend or political direction of diversification in Macau for being less dependent on VIP [gambling], more on the masses, family tourism and entertainment will not change in the medium and long term, but in the short term I think some pragmatism will prevail,” said Rui Pinto Proença, who advised governments in emerging markets to develop gambling policies and regulatory structures.

At a time when official figures point to a 95% drop in the number of visitors in February and casino revenues of about 90%, he concluded that in the short term or during this year there will probably be some relaxation in what was the policy regarding the entry of VIP games, precisely to be able to inject some revenue into the market.

However, there is an associated risk if the immediate strategy is to bet on the VIP market since it is a much more volatile sector than mass tourism, he stressed.

Even so, the March numbers referring to the game revenues already point to a growth in the VIP market and, therefore, to a faster improvement in the operators most exposed to this segment, he added.

The recovery to 2019 numbers will not be predicted yet in the next quarter, he said.

It all depends on when China resumes issuing visas allowing the Chinese tourist to travel to Macau, but above all on being restored some confidence from public health and the economic point of view because, at the end of the day, tourism and in particular gambling tourism are not essential goods, he pointed out.

The latest projections by the Macau government of a 50% loss of revenue in 2020 predict some recovery sometime this year, which will not be “so bad” given the reality – now with the new cases of infection in Macao – and analysts’ estimates pointing to a decrease in revenue of around 70 to 80%, even before the new wave of contagions identified in the territory.

Revenues from major bets in Macau reached 135.23 billion patacas (€15.15 billion) in 2019, down 18.6% from 2018, with VIP gambling losing its status as the most important segment in overall revenues.

According to data released by the Inspection and Coordination of Gaming Department (DICJ), this figure, raised in the big betting rooms of the casinos, represented 30.87 billion patacas (€3.46 billion) less than the previous year.

In addition to this loss, VIP gaming has lost the most dominant position in the world capital of gambling to the mass segment: at least in the last five years, big bets accounted for more than 50% of global revenues.

In 2019, VIP gambling accounted for only 46.2% of total bets raised.

Casinos in Macau ended 2019 with revenues of 292.46 billion patacas (about €32.43 billion), 3.4% less than in the previous year.