Macau Casino Gambling Revenue Rises 40% on VIP Tables
September 2nd, 2010
Gambling revenue in Macau, the world’s biggest casino hub, rose 40 percent to 15.8 billion patacas ($2 billion) in August after SJM Holdings Ltd. and its rivals added tables for high-stakes gamblers.
Revenue for the six operators in the only Chinese city where casinos are legal surged 63 percent from a year earlier to 117.9 billion patacas in the eight months through August, according to Macau’s Gaming Inspection and Coordination Bureau.
The revenue growth in August is the slowest this year and in line with a forecast made by CLSA Ltd. earlier this month. Wynn Macau Ltd., Galaxy Entertainment Group Ltd. and other casino operators have increased revenue from so-called VIP gamblers after boosting the number of baccarat tables with minimum bets of 10,000 patacas or higher.
“A slight moderation in the growth momentum of Macau’s gross casino revenue would probably be a healthy thing at this point,” independent industry consultant Jonathan Galaviz said late yesterday. “A significant real-estate market downturn is likely in China, and its ultimate effect on Macau would be pronounced.”
SJM, which has the greatest market share of the former Portuguese colony’s casino operators, said revenue from VIP gamblers more than doubled in the first half. Wynn Macau, the Hong Kong-listed unit of Wynn Resorts Inc., said revenue from high rollers rose 80 percent in the same period.
‘Robust’ Revenue Trend
SJM fell 0.1 percent to HK$7.42 at 12:50 p.m. in Hong Kong trading and has gained 73 percent this year. Wynn Macau has climbed 41 percent this year, compared with a 4.5 percent decline for the benchmark Hang Seng Index.
“Macau gaming revenues will continue to be strong throughout 2010 from a year-on-year growth perspective, despite a modest cooling of the Chinese economy,” David Katz, an analyst at Jefferies & Co. in New York, said in a note to investors yesterday. “Revenue trends in Macau should remain robust but coming up against challenging comparisons in the near term.”
Las Vegas Sands Corp. Chairman Sheldon Adelson in June predicted Macau casino sales will grow more than 30 percent in the second half. Gambling revenue for the city’s casino operators surged 67 percent in the six months through June.
Tourism Surges
Macau surpassed the Las Vegas Strip as the world’s biggest gambling hub in 2006, after the government ended Stanley Ho’s four-decade gambling monopoly and allowed foreign operators including Las Vegas Sands Corp., Wynn Resorts Inc. and MGM Resorts International. The three Las Vegas-based casino companies compete in Macau with Ho’s SJM, Melco Crown Entertainment Ltd. and Galaxy Entertainment Group Ltd., all based in Hong Kong.
Tourist arrivals in Macau increased 18 percent in the first half, with visitor numbers from China surging 27 percent, according to government data.
Galaxy, part-owned by Permira Advisers LLP, plans to invest an additional HK$800 million ($103 million) to accelerate construction of a Macau casino resort to tap the gambling boom, Chairman Lui Che Woo said in Hong Kong Aug. 31.
The company also said Aug. 31 that first-half earnings before interest, taxes, depreciation and amortization rose 91 percent to HK$990 million. SJM’s first-half net income rose more than fourfold to HK$1.57 billion, the company said Aug. 30.