(Adds details on UnionPay card, share performance)
* World Cup timing diverts bets away from Macau
* UnionPay restrictions not likely to curb revenue
* Macau being "flexible" about UnionPay deadline-casino
MACAU, July 1 Gambling revenue in Macau fell 3.7
percent in June on an annual basis, the first decline in more
than four years, with analysts saying the soccer World Cup had
diverted gamblers and their hefty bets away from the world's
largest casino hub.
The southern Chinese territory of Macau, a special
administrative region, like neighbouring Hong Kong, is the only
place in the country casino gambling is legal.
Gambling revenue from Macau's 35 casinos fell to 27.2
billion patacas in June ($3.4 billion) from 28.3 billion patacas
a year earlier, according to data released by the Macau
government on Tuesday. Analysts were expecting a drop of between
Chinese punters have instead been wagering on the football
competition in Brazil. Authorities arrested 22 people on June 18
for their involvement in an illicit soccer betting ring
according to Macau police. Betting slips the ring received in
one week reached as much as HK$5 billion ($645.19 million) and
the average daily amount of betting was more than HK$700
While June's casino gambling revenue decline was the first
drop since the government started publishing data in 2010, some
analysts expect growth in the coming months to regain momentum
due to solid spending from Chinese visitors.
Over the past two months, global investors have pared bets
on stocks geared to Macau after a raft of regulatory curbs
sparked concerns about slowing revenue growth.
Among the measures are restrictions on the use of state bank
card UnionPay, which Chinese nationals use to get out millions
of yuan. Legally they are only allowed to take 20,000 yuan
($3,200) out of China per day. To get around this, they pretend
to purchase expensive items from stores using their UnionPay
cards and instead of actually receiving the items, they get
Retail stores dotted within the gaming areas in many of the
casinos are frequently used for this purpose, serving as a quick
and convenient stop for mainlanders to take out millions of
Francis Tam, Macau's secretary for economy and finance, has
said no new card device terminals will be allowed in retail
stores within the casino area from July 1, but existing card
devices do not have to be removed, contrasting to what Macau
bankers and casino executives were told in May.
Jewellery and watch stores located inside the gaming area of
casinos like U.S. billionaire Sheldon Adelson's Venetian,
located on Macau's Las Vegas-style Cotai strip, were doing
business as usual on July 1. Customers were still able to make
transactions in UnionPay with the bank card symbol clearly
displayed on store fronts.
Casino executives said on Tuesday the government was being
flexible about imposing deadlines and has given retail stores
until November to relocate from the gaming floor to other areas
within the resort.
Many of Macau's pawn shops and jewellery stores on the
casino floor are owned by well-connected local entrepreneurs and
junket operators so there is added pressure to allow the stores
to keep operating, the executives said.
The casino executives spoke on condition they not be named.
While restrictions on UnionPay are unlikely to significantly
impinge on revenue growth, analysts remain cautious on the
sector in the near term, citing weighing economic factors like
constrained liquidity, softening housing prices and concerns
over the integrity of debt collateral, all of which are likely
to add pressure on Macau's high-roller VIP segment.
A smoking ban, set to come into effect by October, and
restrictions on transit visas, are also issues that may impact
the number of visitors in the coming months.
Hong Kong-listed casino and gaming stocks have fallen from
6-24 percent since the start of this year to July 1. The decline
has pulled back the forward 12-month price-to-earnings ratio of
Hong Kong-listed shares to 17.6.
The drop is a far cry from last year, when Hong Kong casino
and gaming stocks added more than $100 billion to investors'
wealth after stocks on average more than doubled in value.
A Portuguese colony until 1999, Macau typically earns the
equivalent of Las Vegas's annual haul in less than two months.
Annual revenues reached a record $45 billion in 2013, elevating
the tiny territory high above rival gaming destinations.
The fundamentals of Macau's gambling hub remain sound in the
medium to long term say analysts with the opening of eight new
resorts over the next three years and improving infrastructure
developments that will shorten travel time to Macau.
Local authorities and top officials in Beijing are pushing
to diversify Macau away from its reliance on gaming. The
expansion of shows like Melco Crown's House of Dancing
Water and Sands China's boxing events are intended to
attract a wider visitor base who come to Macau for leisure and
tourism rather than to play at the felted baccarat tables.
($1 = 7.9860 Macau patacas)
($1 = 7.7496 Hong Kong dollars)
($1 = 6.2036 Chinese yuan)
(Reporting by Farah Master; Editing by Matt Driskill and Miral