Inside Asian Gaming

INSIDE ASIAN GAMING | December 2010 10 In Focus M acau’s casino revenues are dominated by VIP baccarat, which, in turn, is heavily influenced by shifting fortunes, as measured by volatility in the VIP baccarat win rates experienced by operators from month to month. For example, the industry average VIP baccarat win rate was 2.91% in October, compared to 3.33% in November. The differing win rates meant that even though VIP baccarat turnover was 22.9% higher in October—owing to the week-long Golden Week holiday to mark China’s National Day from 1st October—than in November, actual VIP baccarat revenue recorded in October was a mere 7.6% higher than in November. Meanwhile, total table gaming revenue was just 8.2% higher in October. The headline result in November’s table gaming revenue figures was Sands China’s slide from second place among the six operators in the local market share rankings to the third spot, withWynn Macau assuming the number two position. Inside Asian Gaming undertook a closer examination of the numbers, with the breakdowns of the revenue figures for November and October shown in the boxes below. The statistics don’t include slot revenues, which currently account for less than 5% of total gaming revenue. Sands China’s relegation was largely the result of a slide in its VIP baccarat win rate, from 4.08% in October to 3.42%—its lowest level this year—in November. Wynn Macau, by comparison, had a relatively lucky November, with its VIP baccarat win rate for the month rising to 3.77% from 2.61% in October. Wynn Macau had recently fallen to the fourth spot in the Macau market share race, being overtaken by Melco Crown, but as we pointed out in our Asian Gaming Intelligence e-newsletter last month, this was in large part the result of relatively lucky months at Melco Crown versus relatively unlucky months at Wynn Macau. In November, the VIP baccarat win rates of Wynn Macau and Melco Crown came back close to parity, allowing Wynn Macau to regain a comfortable lead. Furthermore, according to our sources, the recent increase in VIP business at Melco Crown has been driven by the aggressive extension of credit to junket operators—a strategy that has proven in the past to be risky and short-lived. Macau Revenue Breakdown A relatively unlucky month at the hands of high rollers pushes Sands China to third place in the local market share race, while ‘House of Dancing Water’ at City of Dreams has done little to drive the property’s main floor revenues Macau table gaming revenue by operator in November 2010 (excluding slot revenues) SJM 122.97 2.99 3.68 1.62 5.18 71 Wynn Macau 61.79 3.77 2.33 0.41 2.74 85 Sands China 43.16 3.42 1.48 0.92 2.39 62 Melco Crown 53.50 3.73 2.00 0.35 2.34 85 MGM Macau 39.42 3.71 1.46 0.34 1.80 81 Galaxy 52.31 2.82 1.47 0.19 1.67 88 Industry Total/Avg 373.15 3.33 12.42 3.70 16.12 77 VIP Baccarat Turnover (HK$ bn) VIP Baccarat Win Rate (%) VIP Baccarat Revenue (HK$bn) Main Gaming Floor Revenue (HK$ bn) Total Revenue (HK$ bn) Share of Revenue From VIP Baccarat (%)