* April revenue $3.9 billion ahead of May holiday
* Mass market to accelerate growth versus VIP
* Junkets under more scrutiny
(Adds details on VIP, mass market segments, junket operators)
By Farah Master
HONG KONG, May 2 Macau, the world's casino
capital, raked in 31.3 billion patacas ($3.92 billion) in
gambling revenue in April thanks to strong spending by Chinese
visitors keen to place their bets in the country's only legal
Gambling revenue growth in Macau, a special administrative
region like neighbouring Hong Kong, was up 10.6 percent in
April, beating analyst estimates of 6-8 percent growth.
A Portuguese colony until 1999, Macau earns the equivalent
of Las Vegas' 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.
Gambling appetites are seasonally more subdued in April
ahead of a national holiday week in May when record swathes of
visitors are expected to travel to Macau, a tiny territory
one-third the size of Manhattan.
While 2013 saw rapid gambling revenue growth, analysts have
tempered expectations for the coming year due to macro economic
uncertainties in China and the potential for slower credit
growth that could impact liquidity of the VIP segment.
The VIP segment, made up of high-rollers from the mainland,
has for the past several years driven the bulk of Macau's casino
business, making up 70-80 percent of overall gaming revenues.
However in the past year, lacklustre growth has seen the VIP
segment usurped by the rise of China's burgeoning middle class
who now account for more than a third of total revenues.
Junket operators, who loan Chinese VIPs millions of yuan to
play in Macau, have come under increased scrutiny over the past
year as a crackdown on corruption by Beijing has prompted a
closer eye on their lending practises.
A recent high profile arrest of a large shareholder of a
Macau junket operator in March and the disappearance of a
small-scale junket investor in April has dampened sentiment for
the high-roller segment with analysts predicting tighter
liquidity and less risk-taking as a result.
Charlene Liu, an analyst at HSBC in Hong Kong, said the
impact of the disappearance of a junket operator who left with
HK$8 billion-HK$10 billion ($1.03 billion-$1.29 billion) may
surface in the gaming revenue numbers in mid-May.
While the junket sector can yield huge revenues, the flows
are more volatile and less profitable for casino operators who
are forced to pay the operators hefty commissions.
One of the world's fastest-growing economies for the last
three years, Macau has been a gold mine for gaming operators
like U.S. billionaires Sheldon Adelson and Steve Wynn. Their
companies, Sands China and Wynn Macau, are
expanding on Macau's Las Vegas-style Cotai strip along with the
four other licensed operators - MGM China Holdings Ltd
, Melco Crown Entertainment Ltd, Galaxy
Entertainment Group Ltd and SJM Holdings Ltd
While no new casinos are set to open in Macau this year, the
gambling hub will see the opening of eight new resorts over the
next three years.
Low penetration and improving infrastructure developments
that will shorten the journey from the mainland to Macau are
likely to continue to drive visitor growth and demand for
gambling, analysts say.
Across the water from Macau's gleaming casino towers is
Hengqin island, a plot of land three times the size of Macau
that China is developing into a leisure and innovation hub.
Expansion in Macau and the surrounding area comes as rival
gaming destinations from the Philippines to Vladivostok in
Russia set up casino resorts to lure wealthy Asian punters.
Local authorities and top officials in Beijing are pushing
to diversify Macau away from its reliance on gaming. The
expansion of facilities for entertainment, retail and
conventions are intended to attract a wider visitor base who
come to Macau for leisure and tourism rather than to gamble.
($1 = 7.9860 Macau patacas)
($1 = 7.7531 Hong Kong dollars)
(Editing by Matt Driskill)