More than half of Macau’s premium mass players, comprising around 20% of industry GGR, would be impacted if China follows through with a plan to restrict visa approval for any citizens seen to be regularly travelling to the SAR to gamble, according to investment bank Credit Suisse.
In a Tuesday note examining the effects of recent regulatory updates in both Macau and mainland China, analysts Kenneth Fong, Lok Kan Chan and Sardonna Fong warn that the impact would be felt in earnest by the VIP and premium mass segments which are mainly comprised of frequent gamblers.
This follows a statement from China’s Ministry of Public Security, reported by Inside Asian Gaming, in which it promised to restrict visa issuance those who travel to Hong Kong and Macau more than three times in a year, have overstayed in Macau in the past three years, or have travelled to Macau at least three times per year in 2019, 2020 or 2021.
Having surveyed premium mass hosts and junket agents, the Credit Suisse analysts found that premium players have traditionally visited Macau every two to three months with an average 3.2 trips annually.
“In other words, half of the high-end gamblers (above the average) are statistically travelling to Macau more than three times every year while half of them are below the average,” they said. This suggests that “more than 50% of the premium mass players would be impacted. Even if we were to assume that part of the loss can be made up by increasing their gambling budget and time spent, we believe that this would hit ~30% of the premium mass/direct VIP revenue. This is equivalent to 20% of the total industry GGR.”
The analysts also noted that recent visa rejections have likely contributed to Macau’s slow recovery, which has seen monthly GGR reach 18-month and 19-month lows in March and April.
The premium mass crackdown will be felt even harder given the decline of Macau’s once dominant VIP sector, which a decade ago represented more than 70% of Macau-wide GGR. Following the arrests of Suncity Group CEO Alvin Chau and Tak Chun Group CEO Levo Chan, Credit Suisse estimates that industry GGR will be made up of 20% from direct VIP, 40% from premium mass and 40% from base mass by 2024.
