Chinese government may take steps to save Macau casino industry

5 October 2015

The Chinese government may step in to help stem the bleeding within Macau's plummeting gaming market.

According to local Macau media Friday, the liaison office between Mainland China and Macau expects the Beijing government to release measures that would support Macau's economy, notably the casino industry. The move comes the day after Macau gaming regulators said September was the 16th straight month that gaming revenue declined in the market.

The actions weren't specified, but analysts expect the moves will be geared toward improving mass market consumer trends and visitation into Macau.

"Easing of visa restrictions, easier border crossing measures and continued infrastructure improvements could be a few that come to mind," Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski told investors.

He doesn't expect the changes to include an easing of the anti-corruption campaign that has ensnared several high-end junket operators tasked with bringing big-spending gamblers to Macau's casinos.

Through September, Macau gaming revenue is down 36% over the same nine months of 2014. Macau, the world's largest gaming market by revenue, produced a record $45.2 billion in gaming totals in 2013. The figure fell 2.6% in 2014.

Junket operators have long been part of the Macau gaming structure. They market the casinos to high-end players, often utilizing private gaming rooms separate from the mass market gaming floors. The anti-corruption effort has caused high-end baccarat play to nose-dive in Macau, and some gamblers are staying away until the crackdown ends.

"We still expect the VIP market to remain constrained," Wieczynski said. "However, anything that the government does to support the growth on the mass side should be viewed positively."

Las Vegas Sands Corp., Wynn Resorts Ltd. and MGM Resorts International operate casinos in Macau and are expanding their holdings.

The news helped boost the stock prices of the Nevada-based companies Friday. Wynn Resorts closed at $63.52 on the Nasdaq, up $11.81 or 22.84%. Las Vegas Sands closed at $40.87 on the New York Stock Exchange, up $3.89 or 10.52%. MGM was up $1.12 or 6% to close at $19.79 on the New York Stock Exchange.

J.P. Morgan gaming analyst Joe Greff suggested the government could "fine-tune" its visa policy from Mainland China regions, including the introduction of multi-entry visas.

"To state the obvious, any potential measures to help Macau's visitation would be a big positive for the industry," Greff said.

Even as the market continues to slide, more competition is coming to Macau.

The 1,600-room Macau Studio City Hotel-Casino being built by Melco-Crown is expected to open by the end of October. Las Vegas Sands' $2.7 billion The Parisian Macao resort will open next summer, while Wynn Resorts set a late March opening for the $4.1 billion Wynn Palace. MGM Resorts International expects to open its $2.9 billion MGM Cotai late next year.

Related Links
MGM Resorts International Ownership Details
Wynn Resorts Ownership Details
MGM Cotai Details
Macau Studio City Details
Wynn Palace Cotai Details
Macanese Gambling


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