Last week, the Macau Gaming Inspection and coordination Bureau posted, as usual, the monthly total for the SAR’s gambling revenue. At 26.8 billion patacas, the take was an all-time high–and a 42.3% year on year gain. The figures for this year and last are as follows:
| Monthly Gross Revenue from Games of Fortune in 2011 and 2010 | ||||||||||
| Monthly Gross Revenue | Accumulated Gross Revenue | |||||||||
| 2011 | 2010 | Variance | 2011 | 2010 | Variance | |||||
| Jan | 18,571 | 13,937 | +33.2% | 18,571 | 13,937 | +33.2% | ||||
| Feb | 19,863 | 13,445 | +47.7% | 38,434 | 27,383 | +40.4% | ||||
| Mar | 20,087 | 13,569 | +48.0% | 58,521 | 40,951 | +42.9% | ||||
| Apr | 20,507 | 14,186 | +44.6% | 79,028 | 55,137 | +43.3% | ||||
| May | 24,306 | 17,075 | +42.4% | 103,334 | 72,211 | +43.1% | ||||
| Jun | 20,792 | 13,642 | +52.4% | 124,126 | 85,853 | +44.6% | ||||
| Jul | 24,212 | 16,310 | +48.4% | 148,337 | 102,163 | +45.2% | ||||
| Aug | 24,769 | 15,773 | +57.0% | 173,106 | 117,935 | +46.8% | ||||
| Sept | 21,244 | 15,302 | +38.8% | 194,350 | 133,237 | +45.9% | ||||
| Oct | 26,851 | 18,869 | +42.3% | 221,200 | 152,106 | +45.4% | ||||
Interestingly, Hong Kong-based analysts didn’t take this as an unambiguously good result. They point out that, although Golden Week in early October was a rip-roaring success this year, the year on year growth of the market for the month as a whole was the lowest since January. That’s obviously correct.
They conclude from this that Macau’s wealthy Chinese customers are feeling the pinch of the mainland’s efforts to slow economic growth, and are gambling less as a result. A corollary, not so clearly spelled out, is that casinos are posting gambling winnings as revenues today that will ultimately have to be written off as uncollectable receivables. That may also be true, although the bond rating agency Fitch says there’s no evidence of any of this so far. Fitch, in fact, estimates that the Macau gambling market will grow by at least 20% next year, double the rate that the more pessimistic analysts are calling for.
One notable feature of recent months’ results is the market share shift toward the companies with newer casinos, located in Cotai. This suggests there’s gambling space in other, older casinos that is going unused. There are any number of explanations for why this may be happening, like transportation bottlenecks that prevent visitors from reaching Macau, or casinos turn away “iffier” credits. But it’s also possible that we’re reached a phase of market maturity where simply getting to Macau and gambling anywhere isn’t enough. Some gamblers may be choosing not to go to Macau unless they get a minimum level of service.
If so, we should expect a more sedate rate of growth than the 45% or so we’re experiencing now. But the more important investment issue may well be to separate winners from losers. That’s certainly been the case so far in 2011, as Galaxy and China Sands have left other casinos in the dust–especially SJM and MGM.