Posted August 22, 2015 4:46 pm by Comments

A recent report mentioned by GGRAsia about the Macau casino gaming market from a Sanford C. Bernstein Co LLC team headed by strategist Michael Parker and senior analyst Vitaly Umansky, first had this to say about data verse anecdotes:

“Macau may be the ultimate China data sufficiency problem… We have enough data (US$44 billion in GGR [in 2014]) to know that Macau is systemically important. However, we do not have enough data to categorically dismiss many of the anecdotes that get thrown around about Macau.”

And:

“There are only something like two million ‘[U.S. dollar] millionaire households’ in China. It is possible that individuals from approximately 6 percent of China’s millionaire households (around 120,000 VIP players) lost up to 20 percent of their net worth to Macau casinos in 2014. However, that business model simply is not sustainable. That 120,000th richest VIP, by virtue of losing ~US$200,000 each year in Macau, is not going to be a millionaire for long.”

The report goes on to say that the longer term future of Macau casino gaming will involve the creation of fresh supply / fresh demand in the mass market rather than the VIP and premium mass segments.

Moreover, the report noted the anti-corruption climate could continue beyond late 2015 with the campaign becoming more centralized in Beijing (rather than with local party bosses) and less ad hoc.

Finally, the report divided high rollers into a couple of categories:

  1. Private business owners with a high propensity to gamble;
  2. Individuals that are tied to government or state-owned enterprises; and
  3. Private business owners where a significant portion of their wealth comes from corrupt endeavors.

It was then noted:

“Individuals in the latter segment have been heavily targeted by the anti-corruption campaign. We believe that most (if not all) of these types of players have already exited the Macau market (and likely will not return).”

To read the whole article, Mass really is answer to Macau’s problems: Bernstein, go to the website of GGRAsia. In addition, check out our Macau Casino stock list page.

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