Macau Q2 revenue seen dropping from Q1

Although year on year gaming revenue for H1 in Macau is up 5.5 percent, Q2 revenue has fallen 11 percent from Q1, the first sequential quarterly revenue drop since June 2009. Las Vegas Sands and Wynn Resorts both missed their quarterly earnings numbers. The fall is attributed mainly to declining VIP play. Second quarter VIP revenue of MOP54.6 billion ($6.84 billion) was down 5.8 percent year on year, and dropped 16 percent from the first quarter. VIP revenue comprised 60 percent of total revenue in the second quarter, compared with 64 percent in the first quarter, 66 percent last year and 69 percent in 2012. The weakening VIP play is attributed by some analysts to the relatively high tax rate of 39 percent in Macau and the capped junket commission rate of 1.25 percent. In other jurisdictions this rate ranges from 1.4 percent in Singapore to 2 percent in Cambodia. VIP play in Singapore and South Korea has grown faster than in Macau in the last year, and Solaire in Manila doubled its VIP revenue in the first quarter to $2.6 billion. Higher margin mass market play had been growing healthily in Macau, offsetting any earnings loss, but second quarter mass market play growth slowed to 32 percent from 39 percent in the first quarter and spending per visitor has also recently declined.

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