After months of decline, the VIP gambling market in the Macau Special Administrative Region is still active, showing a sequential recovery of 42 percent in the second half of this year. At the same time, baccarat continues to dominate the mass market recovery, with results from other types of bets still significantly reduced.
After the impact of the revision of Macau’s gambling law and the closure of major promotion companies, the gradual decline of the VIP sector as a percentage of the city’s total gambling industry seemed unstoppable.
However, the VIP segment showed signs of life in the second quarter of this year, with local casinos generating 12.2 billion patacas between April and June 2023, an improvement of 42 percent compared to the previous quarter.
According to data released by the Gaming Inspection and Coordination Bureau (DICJ), during those three months, VIP baccarat – the category representing the VIP gambling sector – accounted for 26 percent of the total 45.6 billion patacas accumulated by local casinos.
Just the amount generated by VIP tables during this three-month period already surpassed the 10.1 billion recorded by the sector throughout the year 2022.
Last year, VIP baccarat accounted for 26.3 percent of the total, a percentage that decreased to 20 percent in the first three months of this year.
Before the pandemic, VIP baccarat revenue reached 135 billion patacas, or 46 percent of the total gross gaming revenue of the year.
At the peak of the city’s junket/VIP sector in 2013, annual VIP baccarat revenue reached 238 billion patacas, accounting for two-thirds of that year’s record gaming volume.
Reduced Mass Market Diversity
In the second quarter, the mass market registered a sequential increase of 30.1 percent, reaching nearly 26.6 billion patacas and accounting for a market share of 58.6 percent.
However, almost all of this value was also represented by the city’s flagship game, baccarat, but in non-VIP gaming tables.
The highest value generated within the mass market after baccarat came from gaming machines or slots – there are currently 12,000 in the city’s casinos – which produced 2.6 billion patacas, or 5.8 percent of the total.
It should be noted that the value represented by bets outside the 6,000 gaming tables in Macau’s casinos remains negligible.
In analysis of the results disaggregated by sector and published by DICJ shows general declines for concessionaires operating outside the casinos during this three-month period.
The concessionaire responsible for sports betting in football and basketball, Macau SLOT Co. Ltd. (Sociedade de Lotarias e Apostas Mútuas de Macau, Limitada), ended the second quarter with revenues of 144 million patacas, a sequential decline of 4.5 percent. The majority of bets were placed on football (97 million), while basketball bets amounted to 47 million.
The concessionaire finished 2022 with net profits of 107.7 million patacas after generating 586 million patacas in gross sports betting revenue.
The exclusive sports betting rights provided in Macau Slot’s concession contract were removed from the current concession contract – awarded in 2021. This means that the government can now grant more concessions to explore sports betting activities.
However, no other concession has been granted since the changes were made to the Macau Slot contract, which is valid until 2024.
Despite the recovery, the revenue generated by horse racing bets also continued its downward trend in the second quarter, falling from 12 million patacas in the first quarter to 10 million patacas in the second.
Gross revenue from the racecourse dropped from 101 million patacas in 2018 to 39 million patacas in 2022.
In a financial report signed by the Chairman of the Board of Directors, Angela Leong On Kei, the racecourse concessionaire emphasizes that the COVID-19 pandemic and related travel restrictions during 2022 also had an impact on the horse racing business in various degrees.
The accumulated losses reported by the company responsible for the Macau Jockey Club increased to 2.1 billion patacas in 2022, according to its latest financial report published in the Official Bulletin. The concessionaire’s current contract was extended in 2018 until August 31, 2042.
As part of the license renewal, the company committed to investing between 3.5 billion and 4.5 billion patacas to develop its facilities, including the construction of two hotels, smart stables, a horse theme park, and a riding school.
Finally, the concessionaire responsible for operating Chinese lotteries, Wing Hing Lottery Society, Limited, saw its meager results fall by 25 percent to 4 million patacas in April and June.
