Inside Asian Gaming

inside asian gaming October 2014 6 Macau VIP revenue has fallen two quarters in a row, the sector’s worst performance in five years … So where have all the whales gone? High-End Anxiety M acau VIP has been the wonder of the gambling world. Last year alone, the self-governing Chinese territory’s 35 casinos generated US$45 billion, the equivalent in revenue terms of seven Las Vegas Strips, and credit-fueled VIP play drove 66% of it—68% on average since the market opened to competition 10 years ago, a decade in which total gaming revenue has grown at an amazing annual rate of 26%. But the earth is shifting under the city’s vaunted high end and the junkets that recruit and bankroll it. Through September, growth in the sector has come up short against last year for five consecutive months, and it’s now expected that 2014 will end with VIP revenue in negative territory year on year. This has happened only once in the post-monopoly era. Macau and Las Vegas: on the map they’re an ocean apart, yet on that hyper-competitive plane where China’s prized high-rollers travel and spend, they’re more like next-door neighbors. This is not necessarily working out in Macau’s favor. In the second quarter, VIP in the largest casino market in the world was down year on year for the first time since the autumn of 2012. In the third quarter it would fall even more. The reasons have been well-documented because the six casino concessionaires are all publicly traded. Basically, they boil down to the fact that for wealthy mainlanders lavish spending at private baccarat tables is not as easy financially or logistically as it used to be, and it is not at all expedient politically, which likely is the weightier consideration of the two. Macau’s high-end retail is feeling the pinch as well. Jewelry and watch sales are in a slump. Popular items that serve also to help gamblers evade China’s currency controls their sales in the first quarter were the slowest in a year, according to figures compiled by the Macau Statistics and Census Service. They went completely south in the second, falling 21.9% sequentially and 21.8% compared with Q2 2013. It was the first quarterly decrease in more than four years. Sales of leather goods fell 12% from the Cover Story