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China – Macau to ban smoking at VIP tables by 2019

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Macau’s Legislative Assembly voted on Friday to approve amendments to allow smoking in state-of-the-art lounges, equipped with smoke retention and extraction systems, for mass market and VIP areas, but the government has said it still wants a full ban.

It voted 24 to eight to allow casinos to install smoking lounges on mass gaming and VIP floors but smoking will be banned from all gaming tables and surrounding areas and restrict smoking within casino properties to lounges

Players will still be able to smoke at VIP tables until the start of 2019.

Deutsche Bank Securities analysts Carlo Santarelli and Danny Valoy said: “While the smoking ban is likely to serve as a headwind to GGR, we believe it will level the playing field across all operators and provide a clear view of segment gaming trends. Since the fourth quarter of 2014, when the smoking ban in mass gaming areas went into effect, the DICJ data has been muddied by reclassifications and we believe investors have often been provided with misleading segment-by-segment trends. In the first quarter of 2017 alone, roughly US$700m of mass revenue was reclassified as VIP revenue for DICJ reporting purposes.

“The vast majority of this amount relates to reclassified smoking ‘VIP’ tables at City of Dreams and Galaxy Cotai,” they added. “We believe, come January of 2019, this approximately US$2.8bn annual run-rate mass revenue stream is up for grabs and represents a meaningful revenue share opportunity for the other participants such as Wynn, MGM, LVS Cotai.”

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