July GGR falls 3.5% on weaker VIP

Thursday 1st of August 2019

Macau gross gaming revenue posted a surprise 3.5 percent drop year-on-year in July on the back of reduced VIP spend in the second half of the month, said analysts.

GGR for the month reached MOP24.5 billion (US$3.0 billion), breaking the last two months’ consecutive growth trend.

Analysts from Bernstein said this was mainly due to the Suncity incident, which caused agents and players to fall back, fearing increased scrutiny of the sector.

China’s state-run media published a report accusing Macau’s largest junket of engaging in illegal online gambling and proxy betting. The article prompted Suncity to call a press conference to vehemently deny the allegations and apologise for any inconvenience caused.

Since then, the Macau Gaming and Inspection Bureau has been conducting spot checks of VIP rooms, but found no evidence of illegal activity.

Mass demand was strong in early July, and is estimated to be up mid-single digits month-on-month. VIP volume was down high-single digits month-on-month, said Bernstein.

For August, Bernstein analysts expected GGR growth to range from flat to 2 percent year-on-year, with a potential surprise on the upside if VIP rebounds.

However, trade tensions between the US and China will cast uncertainty over GGR recovery, they said.

Analysts at Deutsche Bank also attributed the decline to Suncity and revised its forecasts for Q3 GGR as a result, commenting that the weakness in July was making a second half recovery less likely.

“Our 3Q19 GGR forecast goes to -1.1 percent (+3.7 percent previously) and our 2019 forecast goes to -0.8 percent (previously +1.4 percent). Our 2020 and 2021 GGR forecasts are +3.2 percent (+2.8 percent previously) and +3.7 percent (+3.7 percent previously), respectively,” it said in a note.