Macau’s Mass Market Segment on the Path to a Faster Recovery than VIP

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Article by : Helen Feb 1, 2021

The Macanese gambling regulator, the Gaming Inspection and Coordination Bureau, published the quarterly results for the final three months of 2020. They are in line with the Morgan Stanley projections that the mass-market segment will recover twice as fast as the VIP one.

VIP Baccarat didn’t even manage to bring in more revenues than mass-market baccarat in 2020: the former one pulled in MOP26.28 billion ($3.29 million), while the latter scored a bit more, MOP26.94 billion ($3.37 million) – an unprecedented flip that happened for the first time since 2015 (the earliest data available on the regulator’s website).

The reversal of roles happened mostly thanks to the last quarter of 2020. Mass-market baccarat revenues went up a whopping 530%, from MOP1.88 billion in 3Q2020 to MOP11.85 billion in the fourth quarter. At the same time, the VIP segment didn’t show such a skyrocketing trend: its revenues went up from MOP2.34 billion to MOP7.63 billion (although it’s still an impressive 226% quarter-on-quarter increase). These stats support Morgan Stanley’s projections that the VIP segment will recover only to 40% of 2019 levels, while the mass market is expected to bounce back to 80% of its revenues collected in the year before the pandemic.

Overall, 4Q2020 ended with far better results for the enclave’s casino industry than 2Q2020 and 3Q2020. Games of chance generated MOP21.84 billion (approximately $2.74 million) in gross revenues, which accounted for a third of Macau’s total gaming revenues in 2020 (MOP60.44 billion, or roughly $7.57 billion).

It is a significant rebound considering that the six months before 4Q2020 brought casino operators only MOP8.12 billion in revenues (roughly $1.02 million).

While the overall rebound trend is positive, Macau’s casino industry still has a long way to go to return to the 2019 levels of the gross gaming revenue (which amounted to MOP292.46 billion, or roughly $36.63 billion, in the year before the pandemic). Recent amendments in China’s Criminal Law regarding prosecuting overseas gambling are likely to be another blow for Macau’s casino industry. Passed at the end of December 2020, they introduce harsher penalties for those who organize overseas gambling activities for mainland Chinese nationals. The amendments will enter into force on March 1, 2021, and they have already made junket operators (businesses that facilitate VIP gamblers trips to locales where casino operations are legal) wary of the consequences.

For instance, Suncity Group is planning to “diversify its customer base from China to Korea,” as laid out in the Goldman Sachs Gaming & Conglomerates Corporate Day Takeaways published on the junket operator’s website. The company has also “started to contemplate diversifying away from its junket business model” and switching to their own IRs.

Suncity Group also closed its Parisian VIP rooms in Macau, as well as others in Australia and Korea, “in response to the soft [VIP] market conditions.” The Chinese New Year doesn’t seem to be catnip for VIP gamblers to come to Macau as the pre-booking levels remain “relatively light,” while the company’s VIP revenues bounced back to a mere 20% of the pre-pandemic levels in December 2020.

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