Macau Casinos Place Their Hopes On Everyday Gamblers After Junket Closures


[ad_1]

A company logo is displayed in front of a fountain at the Wynn Macau Complex in Macau, China on February 8, 2018. REUTERS / Bobby Yip / File Photo

Register now for FREE and unlimited access to Reuters.com

Register

HONG KONG, Dec.21 (Reuters) – Macau casinos face grim near-term prospects after closing most of their lucrative gambling halls aimed at high net worth gamblers and as COVID-19-related travel restrictions prevent the shift to mass market customers on which they will depend in the future.

The former Portuguese colony which is the largest gambling hub in the world in terms of money wagered has long relied on the income of VIP gambling halls where the big guys have placed massive bets.

But the recent Chinese government’s crackdown on the junk food trade, which provided transportation, accommodation and credit for high net worth customers in gambling, calls into question the financial prospects of casino operators including Wynn Macau (1128.HK ), Sands China (1928 .HK) and MGM China (2282.HK).

Register now for FREE and unlimited access to Reuters.com

Register

Game rooms run by Junket inside casinos accounted for around a third of Macau’s overall gaming revenue in 2019, according to Alidad Tash, managing director of 2NT8 Limited, a consulting firm specializing in international casinos and resorts. integrated.

However, those revenues dried up after the November arrest of Alvin Chau, the head of Macau’s largest junket operator, Suncity, which triggered the closure of gambling halls at all of the city’s casinos. Chau is accused of setting up a Macau-based internet platform that allows punters in mainland China, where gambling is illegal, to place bets abroad.

Replacing VIP revenue will depend on the casinos’ ability to attract mass market players which Bernstein analysts say is the “secular long-term growth story” for the industry, but that depends on how COVID is controlled -19.

“The pace of the recovery in late 2021 and 2022 hinges on COVID outbreaks, diminishing travel restrictions, and the key to the recovery is to bring mass gamers in Macau back to more normal levels,” analysts said. in a note.

“The future remains in mass and premium mass recovery.”

Mass refers to family players who play table games, such as baccarat or blackjack, or slot machines. The premium pool includes players who bet large enough amounts to win free rooms, food, and transportation, but neither have their losses discounted nor receive credit from the casinos.

Representatives for Wynn Macau, Sands China and MGM China did not respond to requests for comment on their plans to replace VIP income when contacted by Reuters.

Since Chau’s arrest, shares of Wynn Macau have fallen by about 23%, Sands China has fallen by about 13%, and MGM China has fallen by 20%.

Suncity could not be reached for comment.

RESTRICTED ENTRY

China’s strict restrictions on movement linked to COVID-19 have limited the pool of players from the mainland who can enter Macau. During the pre-COVID month of October 2019, there were 3.2 million visitors who entered Macau, in October 2021 which plunged to 328,245 visitors.

Tours remain depressed even though travel without quarantine is allowed for most arrivals from mainland China.

Group visas for players have not been issued since the COVID-19 pandemic and individual visas for Macau have come under further scrutiny, according to Ben Lee, founder of the gaming consultancy firm of. Macau IGamiX.

There are also concerns about how Macau players will be able to bring funds to the region.

Junkets, in addition to granting credits to big players, also operated a shadow banking network that helped gamers bypass China’s outflow rules that limit the withdrawal of the equivalent of $ 50,000 from the country at one time. year.

Mass premium and direct premium players, who bet enough to get discounts on their losses and receive credits from the casinos, have also used these methods to move funds.

But with the junkets closing, players have lost the most convenient channel to bring money to Macau, 2NT8’s Tash said.

Register now for FREE and unlimited access to Reuters.com

Register

Report by Eduardo Baptista; Editing by Anne Marie Roantree and Christian Schmollinger

Our standards: Thomson Reuters Trust Principles.

[ad_2]

Comments are closed.