IAG October 2014 - page 6

MacauVIP revenuehas fallen
twoquarters ina row, the
sector’sworst performance
in five years…Sowhere
haveall thewhalesgone?
acauVIPhas been thewonder of
thegamblingworld. Last year alone,
the self-governingChinese territory’s
35 casinos generatedUS$45billion,
theequivalent in revenue terms of
sevenLasVegas Strips, and credit-fueledVIPplaydrove
66%of it—68%onaverage since themarket opened
to competition 10years ago, adecade inwhich total
gaming revenuehas grownat anamazingannual rate
of 26%. But theearth is shiftingunder the city’s vaunted
highendand the junkets that recruit andbankroll it.
Through September, growth in the sector has comeup
short against last year for five consecutivemonths, and
it’snowexpected that 2014will endwithVIP revenue in
negative territoryyear onyear. Thishashappenedonly
once in thepost-monopolyera.
Macau and Las Vegas:
on the map they’re an ocean apart, yet
on that hyper-competitive plane where China’s prized high-rollers
travel and spend, they’remore like next-door neighbors. This is not
necessarilyworkingout inMacau’s favor.
In the second quarter, VIP in the largest casino market in the
world was down year on year for the first time since the autumn
of 2012. In the third quarter it would fall even more. The reasons
havebeenwell-documentedbecause the six casino concessionaires
are all publicly traded. Basically, they boil down to the fact that for
wealthy mainlanders lavish spending at private baccarat tables is
not as easy financially or logistically as it used tobe, and it is not at
all expedient politically, which likely is the weightier consideration
of the two. Macau’s high-end retail is feeling the pinch as well.
Jewelry and watch sales are in a slump. Popular items that serve
also to help gamblers evade China’s currency controls their sales
in the first quarter were the slowest in a year, according to figures
compiled by the Macau Statistics and Census Service. They went
completely south in the second, falling 21.9% sequentially and
21.8% compared with Q2 2013. It was the first quarterly decrease
in more than four years. Sales of leather goods fell 12% from the
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