According to Macau’s Gaming Inspection and Coordination Bureau, gross gaming revenue (GGR) in Macau for the month of June declined 3.7% to $3.4 billion – the first time since Jun 2009. The decline can be attributed to the football World Cup that has diverted some bettors and tourists away from the world’s largest gambling hub.
However, this decline is narrower than analysts’ expectation of 4.0% decline. A couple of analysts expect Macau’s GGR for the month of July to be up 2.0% year over year as the World Cup ends on Jul 13, 2014.
Despite the decline for the month of June, share prices of most of the leading casino operators MGM Resorts International (MGM), Melco Crown Entertainment Limited (MPEL), Las Vegas Sands Corp. (LVS), Wynn Resorts Ltd (WYNN) continued to surge during the trading session.
In fact, shares of these players gained last week on the back of prospects of legalization of gambling in Japan, easing of restrictions imposed on gamblers by Macau officials and an improved top-line at Las Vegas for the month of May. (Read More: Gambling Stock Roundup: MGM Resorts, Melco Crown & Others Up on Prospects of Legalization of Gambling in Japan).
However, one cannot ignore the fact that these companies have been adversely affected by a sluggish domestic market. Besides the domestic market, factors that remain concerns include China's crackdown on illegal money transfers, credit growth concerns, potential for tighter restrictions on visas and an impending smoking ban in casinos. These issues could adversely affect the revenues of the companies in the Macau region in the future months. Therefore, a few analysts are concerned over the near-term.
Nevertheless, they are optimistic about prospects in Macau and Japan. The latter has the potential to become the second-largest market in Asia after Macau, once gambling is legalized. Currently, MGM Resorts, Wynn, Melco Crown and Las Vegas Sands Corp. all carry a Zacks Rank #3 (Hold).
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