MACAU BUSINESS


in a conference call in 2015 when local casinos swirled in the eye of the storm. That year, Wynn Macau’s adjusted EBITDA (earnings before interest, tax, depreciation and amortization) declined by nearly half, while profits plunged more than 62 per cent. ‘Mass [gross gaming revenue] per visitor . . .


increased from approximately HK$2,045 [US$262.2] in 2010 to its peak in Spring 2014 of over HK$4,700, but then experienced consecutive declines until early 2016 due, among other factors, to the economic slowdown and the anti-corruption campaign [on the Mainland],’ said brokerage Sanford C. Bernstein and Co. LLC in its recent report on the anti-corruption campaign.


More mass


The city’s gaming revenue had fallen for 26 consecutive months from June 2014 before starting a recovery trajectory in August 2016 onwards, government data reveals. The Sanford Bernstein analysts led by Vitaly Umansky and Robin Zhu found that the retreat in gaming revenue coincided with the rising number of anti-corruption investigations announced by the nation’s disciplinary watchdog. The number of probes unveiled each month usually hovered at over 50 in the 2014-2015 period, peaking at nearly 90 cases in August 2014, before gradually falling to around 20-30 in 2016, data from the brokerage shows. The junkets – middlemen bringing high


rollers from the Mainland to splurge on gaming tables here with credit to be settled afterwards – were hit the hardest in the industry by Mr. Xi’s determination to weed out corruption and shift the local gaming industry from VIP baccarat to the mass and premium mass sectors. Peaking at the record high of MOP238.52


20 NOVEMBER 2017


billion (US$29.81 billion) in 2013, VIP gaming revenue has fallen for three straight years to MOP118.96 billion last year, the lowest level since 2009, official figures show. VIP revenue accounted for 53.2 per cent of the city’s total gaming revenue last year vis-a-vis 69.3 per cent in 2012. Facing a downturn that persisted for more


than two years, many small-sized junkets have been forced out of the market, while mid-to- large sized junkets have trimmed their local presence and looked for business opportunities elsewhere, such as the Philippines. The number of licensed gaming promoters – the official term for junkets – in the city fell by nearly half from 235 in early 2013 to 126 in January this year, according to government data.


VIP resurgence


With the momentum of the unprecedented campaign having seemingly lost some steam in recent times, more high rollers have apparently started returning. VIP baccarat revenue has risen for four consecutive quarters from the October-December period of last year, hitting nearly MOP38.69 billion in this year’s third quarter, the highest in 30 months, official data shows.


“The junket segment has stabilised for a while since some time last year,” said Kwok Chi Chong, President of the Macau Association of Gaming and Entertainment Promoters, a lobby group of local junket operators including Alvin Chau Cheok Wa, boss of Suncity Group, the city’s largest junket operator. “Some 20 VIP rooms have been opened in


recent months by large and small-sized junket operators,” Mr. Kwok notes, adding some are new VIP rooms and some reopened after closure in the past few years. The junket group head does not think that the slowing anti-graft


drive on the Mainland was the sole reason for the recovery of the high roller segment, adding better economic climate and liquidity also contributed to the hike. In spite of cooling signs in the past year, anti-corruption remains a priority of Mr. Xi’s second five-year reign. Addressing the Chinese Communist Party at its 19th National Congress, a twice-a-decade leadership reshuffle, in late October, the President noted: “The fight against corruption has formed an overwhelming posture and strengthened in development.” The central government will set up a new national supervisory commission next March, which will integrate the functions of current supervision authorities, corruption prevention agencies and departments for handling bribery. Compared with CCDI that only investigates members of the Chinese Communist Party, the new mechanism oversees all state employees, including police and judges. “It’s not the first time the central government


has vowed to clamp down on corruption: we expect the junket sector will remain stable in the coming years with a growth of about 10 per cent [annually],” said Mr. Kwok, upbeat about the prospects of the industry.


Healthier industry


So does Mr. Wynn, who believes the VIP segment has become healthier following the turmoil. “[The junkets] that survived are much stronger financially, and they have all been very carefully investigated [by the authorities],” he said in an interview with Japanese media outlet Nikkei Asian Review. “And that business is very healthy now.” With an obvious change in his tone and mood from two years ago, the US gaming magnate said in the interview that the company’s Macau operation has been turning around. “Businessmen with money during the campaign against corruption became very careful, very conservative about [spending],” he said. “However, after everybody relaxed, the business came back: at least, it came back to our company because my clientele and our customers have more money and more freedom…so there is no major change.” Albeit a roller coaster ride in terms of gaming


revenue, there has been heightened scrutiny of the industry in the past five years. New anti- money laundering rules have become effective in the gambling enclave since last year, including stricter measures than the last version issued in 2006, such as requiring gaming operators and junket operators to keep daily records and hire compliance officers. But the new rules do not change the threshold set for casinos to report suspicious transactions at MOP500,000.


The local gaming regulator, the Gaming


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70