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US – Las Vegas and Macau report best months in years

By - 2 March 2017

Shares in Las Vegas Sands, Wynn Resorts and MGM Resorts soared after their two most important markets reported their best combined months in years.

Gaming revenues in Macau increased to their best level in more than two years just a day after Nevada reported its strongest month of revenues in nearly four years.

Macau’s GGR increased by 18 per cent year-on-year in February, reaching $2.88bn and marking its the best revenue earning month since January 2015. More visitors came to the Chinese territory over the national New Year holiday helped by the openings of The Parisian and Wynn Palace.

Wells Fargo Analyst Cameron McKnight, said: “February Macau gaming revenues increased 17.8 per cent year-on-year to MOP22.9bn ($2.86bn), above investor expectations. Average daily revenue in February was MOP 821 million per day, up from MOP 621m in January. The year/year growth was driven by an easy comparison, with last year February being down 0.1 per cent year/year. We believe tightening capital controls and a pre-Chinese yuan boost given to credit have driven better than expected February revenues.”

Richard Huang, an analyst at Nomura said: “While it is hard to call the last week’s results a trend, the industry has showed clear signs of stabilisation.”

He pointed to the opening of new resorts as the reason that high rollers had been attracted back to Macau.

Vitaly Umansky, an analyst with Bernstein, agreed saying that junket marketing events over the last week of February had powered an increase in VIP gamblers.

Analysts at Fitch Ratings said: “This growth coincided with the opening of The Parisian and Wynn Palace in the third quarter of 2016, as well as relatively solid China economic indicators. We expect the returns on investment of the new resorts to improve as the market pivots toward the mass market segment and infrastructure projects come online. Our positive long-term outlook for Macau is supported by the growing Chinese middle class, expanding Chinese economy, albeit at a slower rate, and our belief that the region remains underpenetrated.”

February was the seventh month on the bounce that Macau’s casino sector has seen growth
Ian Michael Coughlan, President of Wynn Macau, commented: “There’s a lot more confidence. There appears to be more liquidity in the market, particularly with the junkets, and it’s being sustained. The outlook is pretty promising.”

Melco Chief Executive Officer Lawrence Ho added: “I think VIP has surprised in terms of its recovery. But at the same time, ultimately, the future of Macau is going to be pinned on the growth of the mass market.”

Nevada meanwhile saw its state gaming revenues increase by 12 per cent in January to $1.04bn, representing its best month since February 2013 with the Las Vegas Strip celebrating a 14.4 per cent year-on-year increase to $532m.

January was the 35th time that Nevada has generated more than $1bn in win, a level first achieved in March 2005. Its best month came in October 2007 when the state recorded $1.165bn.

“It’s a good month,” Mike Lawton, senior analyst with the control board, said. “But I’m not going to say that we are going to be seeing a billion-dollar win every month.”

He added that the $1.04bn total was .the highest win amount since February of 2013, so you have to go back a little ways since we recorded such a high number.’

“The billion dollar number is impressive,” he added. “The last time we recorded a billion was in July. It’s a nice sign that we recorded a billion twice in the last seven months.”

The increase was driven by Chinese New Year beginning at the end of January, compared to being solely in February as it was last year.

“Chinese New Year is a big event that brings in a lot of baccarat play,” Mr. Lawton said. “It was a very good month for baccarat. We really haven’t seen a lot of baccarat volume increases lately. We’ve only had five increases in the last 25 months.”

Baccarat generated a win of $157.9m in January, up 55.1 per cent year-on-year.

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