22 March 2019
Billy Ng expects Macau gaming revenues to drop 10 percent in 2015. Photo: EJ Insight
Billy Ng expects Macau gaming revenues to drop 10 percent in 2015. Photo: EJ Insight

Macau casinos face another bad year as govt tightens oversight

Macau’s gaming revenues are expected to fall further this year as local authorities step up their efforts to regulate the industry, Bank of America Merill Lynch said Wednesday.

Gaming revenues at the city’s casinos fell last year for the first time, by 2.6 percent, ending more than a decade of booming growth since the reform of the industry in 2002. They dropped for seven straight months to December.

Billy Ng, head of Asia gaming at Bank of America Merrill Lynch Global Research, said the industry is now going through an adjustment period that may last a further three to six months.

The VIP segment, especially hit by China’s anti-corruption campaign, will continue to bear the brunt.

“The adjustment period is about the Macau government’s review of gaming policy to see which area needs more regulatory oversight. This makes us hold a negative view on the VIP segment,” Ng said.

He expects gross gaming revenues of the casino industry as a whole to fall 10 percent this year.

Revenues in the VIP segment are expected to slump 16 percent, compared with a 2 percent drop in the take from the mass gaming floor.

VIP revenues may plunge as much as 36 percent in the first quarter, because of the high base in the same period last year, the likely extension of the smoking ban from the mass gaming floor to the VIP lounges, and stricter anti-money laundering enforcement by the Macau government.

Meanwhile, Melco Crown Entertainment (06883.HK) said in a regulatory filing last week it will delist its shares from the Hong Kong stock exchange for reasons of cost and utility.

The company completed a dual primary listing of its shares on the main board of HKEx by way of introduction in 2011 after its shares were first listed on NASDAQ in the United States in 2006.

But it said appropriate opportunities to raise additional equity in Hong Kong have not arisen since the introduction, and the volume of trading in the shares on the stock exchange remains very limited.

In addition, maintaining the listing of the shares on the bourse requires additional regulatory compliance obligations, which will incur much greater costs and administrative burden.

Ng said Melco Crown’s delisting is only an isolated case and other casinos are unlikely to follow suit.

“Many companies list in two venues, and if their main trading market is in the US, they may consider [delisting] from a cost-saving perspective,” he said.

“We don’t need to take this too seriously and speculate whether this is because the Macau market or Hong Kong market is not doing so well now,” Ng said.

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EJ Insight reporter

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