Macau casinos bank on new gaming capacity

A streak of weak gaming revenue that threatens to continue over the next year could dampen the credit outlook for Macau's casino operators, however, upcoming resorts ought to play down the risks, said Standard and Poor’s.

“Plans by the operators to open several new casinos, falling capital investment requirements, and stabilizing revenue from the mass-market, or regular-customer, segment ought to temper the risks,” the ratings services said in a new report.

S&P cut its gaming revenue forecast to a drop of 30 percent to 35 percent in 2015, compared with a previous expectation of a 25 percent to 35 percent fall. 

The company says a meaningful rebound in gaming revenue in Macau is unlikely in 2016 given policy headwinds and the shift from high rollers to the mass market. The impact of the Chinese government's commitment to stamp out corruption and tighten regulations in Macau will continue to constrain growth in gross gaming revenue in Macau.

"The decline in gross gaming revenue in Macau in the first 10 months of 2015 was more severe than we anticipated, with revenue falling 35.5% year on year, due to a more than 40% decline in the high-roller or "VIP" segment, and about a 30% drop in the mass market segment," said Sophie Lin, a credit analyst at Standard & Poor's and author of the report. 

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