Macau Casino Revenue in June Declines on World Cup

Macau’s casino revenue declined 20 percent in June from the previous month as the World Cup kept some gamblers away from card games and slot machines in the world’s biggest betting hub.

Gambling revenue for casinos in the city fell to 13.6 billion patacas ($1.69 billion) in June from 17.1 billion patacas in May, according to Macau’s Gaming Inspection and Coordination Bureau. SJM Holdings Ltd., the casino operator with the biggest market share in Macau, fell the most in five months on Hong Kong’s stock market.

The city’s gambling industry will continue to be hurt by “temporary softness in VIP gaming as the World Cup approaches its final stages,” Deutsche Bank AG analyst Karen Tang said in a note to clients last night. “We expect market growth to resume sequentially in August which is traditionally the summer travel season.”

Police in Hong Kong, an hour’s ferry ride from Macau, have set up a task force to crack down on illegal football betting during the World Cup, the Standard newspaper reported in May. Authorities have seized HK$170 million ($22 million) in records of illegal bets on football in two locations, the South China Morning Post reported June 28. The World Cup’s final game this year is on July 11.

Junket Operators

China’s economic growth, coupled with a lending boom, has fueled a boom in revenue for casinos in the only place in the country where they are legal. Junket operators, who bring high- limit gamblers to Macau and lend them money, have benefited from a “sudden increase” in credit, Deutsche Bank’s Tang said in a June 11 report.

SJM dropped 6.7 percent to HK$6.15 in Hong Kong trading, the biggest decline since Jan. 27. That cut this year’s gain of billionaire Stanley Ho’s casino company to 44 percent, compared with a 9 percent slide for the Hang Seng Index.

CLSA Ltd.’s Macau Gaming Index had outperformed Hong Kong’s benchmark Hang Seng Index by 40 percent this year as of June 25, according to a note to clients from analyst Aaron Fischer.

“Growth in Macau should moderate,” said Jonathan Galaviz, an independent gambling industry strategist. “Macau is becoming overly reliant on casino revenue and taxes.”

Galaxy Entertainment Group Ltd. slid 6.8 percent, the most since Oct. 29, to HK$3.95, paring its gain this year to 23 percent. Sands China Ltd., the unit of billionaire Sheldon Adelson’s Las Vegas Sands Corp., slid 4.4 percent. Wynn Macau Ltd., the unit of the casino company founded by billionaire Steve Wynn, dropped 3 percent.

Market Share

Melco International Ltd., one of the partners that control Melco Crown Entertainment Ltd., declined 1.6 percent, extending its retreat this year to 14.8 percent. It’s the only Hong Kong- listed Macau casino operator to have declined since the start of 2010.

SJM had 30.3 percent of Macau’s casino gambling market, followed by Sands China at 21 percent, according to estimates by CLSA’s Fischer. Wynn ranked third with 17 percent and Melco Crown had 13.5 percent.

MGM Mirage’s venture with Pansy Ho had 7.5 percent, said Fischer, who said gambling growth in Macau was hurt by the World Cup. Pansy Ho, the daughter of Stanley Ho, is also managing director of the billionaire’s Shun Tak Holdings Ltd., a ferry operator and property developer.

Macau casino gambling revenue surged 57 percent in the first quarter to about 41 billion patacas as China’s economic growth accelerated to 11.9 percent, the fastest pace in almost three years.

High Rollers

Last month’s number, which is 65 percent higher than June last year’s, means second-quarter revenue for casinos in the former Portuguese colony increased 77 percent to 44.9 billion patacas, according to Bloomberg calculations using data on the gambling regulator’s website. The total for the first half rose 67 percent to 85.9 billion patacas.

“While a huge growth number, this is probably a tad lighter than expected,” said Fischer, who added he expected Macau’s June casino revenue to show a year-on-year increase of 70 percent to 75 percent.

Revenue growth from high rollers placing wagers at baccarat tables where the lowest bet per hand is 10,000 patacas was about 124 percent in May compared with 58 percent for “mass-market” bettors, Deutsche Bank’s Tang had said in a separate note. The bets at Macau’s “VIP tables” can go up to as much as 2 million patacas a hand.

China’s lending boom has boosted the capital of junket operators, who also act as debt collectors and receive commissions from casinos.

VIP gamblers contribute about 70 percent of Macau’s gambling revenue, CLSA analysts Fischer and Huei Suen Ng estimate.

At Galaxy’s flagship casino StarWorld, high-limit tables account for 85 percent of revenue, according to Chief Financial Officer Robert Drake.

Macau surpassed the Las Vegas Strip as the world’s biggest gambling hub in 2006. Macau’s casinos had a record 119 billion patacas in revenue last year, 9.7 percent higher than in 2008.

For Related News and Information: Macau gambling data: http://tinyurl.com/macaucasinorevenuejune2010 Macau’s casino industry: NSE REGION: MACAU AND TOPIC: CNO <GO> Most-read Macau news: TNI MACAU MOSTREAD <GO> Macau’s GDP growth: MUGCPCOY <Index> GP <GO> SJM pivot graph: 880 HK <Equity> PIVG <GO> Sands China short interest: 1928 HK <Equity> SI <GO> Wynn Macau rate of change: 1128 HK <Equity> IROC <GO> Top consumer news: TOP CON <GO>

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