China’s Crackdown on Macao Gambling Travels to Hit Hard – Credit Suisse

China’s plan to restrict visa approvals to citizens to be regularly traveling to Macao to gamble will have serious consequences for the industry’s revenue streams.

China’s Ministry of Public Security recently promised to restrict visa issuance to those who travel to Hong Kong and Macau for more than three times a year, have overstayed in Macau in the past three years, or have travelled to Macau at least three times per year in 2019, 2020 or 2021.

According to investment bank Credit Suisse, potentially over half of Macau’s premium mass players, around 20% of industry GGR, would be impacted.

In a Tuesday note, bank analysts Kenneth Fong, Lok Kan Chan and Sardonna Fong warn that impact would be felt mostly by the VIP and premium segments, the ones that gamble most frequently.

After surveying premium mass hosts and junket agents, the Credit Suisse analysts conclude that premium players have traditionally visited Macau every two to three months with an average 3.2 trips annually. The note explains:

“In other words, half of the high-end gamblers (above the average) are statistically travelling to Macau more than three times every year while half of them are below the average.

[Therefore] more than 50% of the premium mass players would be impacted. Even if we were to assume that part of the loss can be made up by increasing their gambling budget and time spent, we believe that this would hit ~30% of the premium mass/direct VIP revenue. This is equivalent to 20% of the total industry GGR.”

The analysts add to their findings that recent visa rejections have also contributed to Macau’s slow recovery from the Covid-19 pandemic, as shown in hitting GGR 18-month and 19-month lows in the last two months.

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