\nMacau gaming revenue took a nose dive for the third consecutive month in August, sending fears on Wall Street that the declines in the world\u2019s largest gaming market could continue into 2015.<\/p>\n
\tDespite the 6.1 drop in August \u2014 the largest decline in 2014 \u2014 the Macau gaming market is up 8.1 percent for the year\u2019s first eight months following 2013\u2019s record $45.2 billion in gaming revenue.<\/p>\n
\tThe last time Macau saw three straight monthly gaming revenue declines was five years ago. Macau suffered seven straight monthly revenue declines between December 2008 and June 2009.<\/p>\n
\tUnion Gaming Group principal Grant Govertsen, who is based in Macau, said \u201ca confluence of factors\u201d have driven down high-end wagering in Macau, which is the largest segment of the region\u2019s gaming market.<\/p>\n
\tGovertsen said the biggest issue has been an anti-corruption crackdown by the Chinese government.<\/p>\n
\tOn Monday, the Macau\u2019s Gaming Inspection and Coordination Bureau said the market collected $3.6 billion from gamblers in August, a 6.1 percent decline compared to August 2013. The down month follows a 3.7 percent decline in June and a 3.6 percent drop in July.<\/p>\n
\tJ.P. Morgan gaming analyst Joe Greff said the VIP demand and junket liquidity \u201chave been negatively impacted\u201d by the anti-corruption crackdown.<\/p>\n
\t\u201cWe continue to expect negative market-wide VIP performance while at the same time we are monitoring mass market growth trends, which, in August, much like July, decelerated more than our prior thinking,\u201d Greff said.<\/p>\n
\tGovertsen said he wouldn\u2019t be surprised to see the declines continue into the second half of next year, about the time the second phase of the Galaxy Macau opens. The property is owned by Hong Kong-based Galaxy Entertainment.<\/p>\n
\t\u201cBased on continued conversations we have with industry insiders the consensus still seems to look for an early 2015 recovery,\u201d Govertsen said. \u201cThe VIP segment remains weak.\u201d<\/p>\n
\tGovertsen added the market could see a jump in high-end play during October, which is a holiday period in China.<\/p>\n
\t\u201cThis temporary blip, in our view, could potentially create a false expectation of recovery,\u201d Govertsen said.<\/p>\n
\tAnalysts had expected the Macau market to dip in June because of attention the paid to the World Cup soccer games.<\/p>\n
\tBut any prolonged downturn in Macau concerns Wall Street because three Nevada-based casino operators \u2014 Las Vegas Sands Corp., Wynn Resorts Ltd. and MGM Resorts International \u2014 derive a significant amount of their annual revenue from the market, which is the only legal gaming region in China.<\/p>\n
\tAll three companies are in the process of building new multibillion-dollar hotel-casino developments on the region\u2019s Cotai Strip: the $4 billion Wynn Paradise, the $2.9 billion MGM Cotai and the $2.7 billion Las Vegas Sands Parisian.<\/p>\n
\tThe developments are expected to open by 2016.<\/p>\n
\tMacquarie Securities gaming analyst Chad Beynon called the August decline \u201ca negative surprise,\u201d which indicates that the major anti-corruption measures instituted by the Chinese government \u201ccould further affect VIP throughout the rest of 2014.\u201d<\/p>\n
\tBeynon lowered his stock price targets on Wynn, Las Vegas Sands and MGM Resorts.<\/p>\n
\tThe August gaming revenue totals were announced as Macau Chief Executive Fernando Chui Sai On was reelected to his second and final five-year term as Special Administrative Region\u2019s top elected official.<\/p>\n
\tChui is expected to begin the process of negotiating gaming concession renewals, which start expiring in 2020.<\/p>\n
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