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By Tony Lai


A dip into the unknown


Five years ago, gaming on the peninsula still accounted for more than 50 per cent of total revenues. We’re far from that today – and it’s coming down every year. When will it end? Nobody knows how to respond…


P


Peninsula market share 2010 2011 2012 72.9 68.9 61.3 27.1 31.1 38.7


Peninsula COTAI


20 MAY 2019


ut ten gaming analysts in a room and they will say the same thing: the revenue from gaming on the Peninsula will continue to decline. Consensus, however, ends there. Few would dare to say when and by what


percentage share this market will stabilise. Take this as an example: in 2015, Daiwa Securities published a very detailed report on the issue of gaming on the Peninsula, predicting at that time that COTAI would be worth just over 73 per cent in 2017 (see table).


2013 57.1 42.9


2014 2015 (E) 2016 (E) 2017 (E) 54.3 49,9 37.6 26.7 45.7 50.1 62.4 73.3


2018


take into account that there are so-called satellite casinos, especially on the Peninsula, these accounts can become more complicated. “As new properties open up in COTAI,” adds Mr. Lee, “the


Peninsula’s share of the overall market will naturally fall. That – coupled with ageing first generation properties that have yet to see any refurbishment – will only continue the decline.” “Yes, gaming revenue share will continue to increase on


Source: Daiwa Capital Markets; Macau Gaming Sector, September 2015 and March 2016 “Based upon our research, we estimate that COTAI now


generates somewhere between 62-65 per cent of Macau’s overall gross gaming revenue in the 2018 calendar year,” Ben Lee of iGamix consultants told Macau Business. In fact, there are no official figures since the Gaming Inspection and Co-ordination Bureau (DICJ) does not provide them. In order to know how much the Peninsula is worth it is necessary to go to the financial reports of the concessionaires. It is enough to see that at the end of last year COTAI saw its total share of the local gaming market climb above 60 per cent for the first time – reaching 61.2 per cent – according to a report by Melco Resorts. But if we


COTAI as an overall percentage – due to the appeal of the ‘COTAI Strip brand’ but also by creating new visitor markets attracted to the IR gaming and non-gaming facilities,” says Professor Glenn McCartney of the University of Macau. Let us return to the essential question: when will this fall stop? Grant Govertsen of Union Gaming, who expects gaming


revenues in COTAI to likely account for as much as 70 per cent of overall gross gaming revenue for the next several years, has a pessimistic outlook. “The reality is that the Peninsula’s market share is likely to


continue to decline on an almost permanent basis,” he says. “The simple fact is that all new development has and will continue to occur on COTAI. As such, that’s where the customers will go given that that’s where the majority of hotel rooms will be located, not to mention the lion’s share of the non-gaming amenities that are increasingly attracting customers to COTAI over the Peninsula.” And Ben Lee is no more optimistic, observing, “The


Peninsula market has an upper ceiling as there is not much more space left available for expansion. With traffic already


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