Macau GGR declines for third month; corruption crackdown blamed

Macau’s gross gambling revenue dropped for a third straight month in August, dropping 6.1 percent, worse than most analysts’ expectations.
According to the Gaming Inspection and Coordination Bureau, revenue fell to 28.9 billion patacas in August ($3.6 billion) from 30.7 billion patacas a year earlier. Analysts had been expecting a decline of between 3 and 6 percent.
The drop in June and July was mainly blamed on the distraction from the World Cup, though this month, analysts say China’s crackdown on corruption is crimping revenue from VIPs, which makes up about two thirds of the total in the territory.
The 3.7 percent June drop in GGR was the first decline recorded in the world’s biggest gambling hub in five years. Analysts had been predicting a recovery once the World Cup effect had passed.
A smoking ban due to come into effect in October is also expected to further slow revenue, at least in the short term. Construction work on many of the casino floors to comply with the new regulations is having some impact on mass market gamblers.
UBS said the lack of a seasonal rebound in the VIP sector had been a disappointment and the firm is reviewing its estimate for the full year.
UBS said in a note that it estimates mass market revenues grew mid to high teens in August, while VIP revenues declined in the high teens.
“Based on our checks with industry participants, we believe that some properties were hampered by weak VIP hold in latter part of August, which could have dragged headline revenues. Nonetheless, we believe VIP volumes have remained flattish month on month vs. July and June, showing no seasonal sequential growth typical of the summer months. We believe mass segment could have shown slightly better than seasonal growth in August vs. July.”
UBS said the consensus estimate for full-year revenue currently stand at about 6-7 percent, meaning growth for the rest of the year are for growth of 4-5 percent.