Resilience in Macau gaming seen amid crackdown on illegal money exchanges, Citigroup says

Jenny Ortiz July 17, 2024

SiGMA news

Resilience in Macau gaming seen amid crackdown on illegal money exchanges, Citigroup says

Citigroup analysts George Choi and Ryan Cheung have reassured investors that concerns regarding a crackdown on illegal cross-border fund flows and its potential impact on Macau’s gross gaming revenue (GGR) are likely exaggerated. In a note on Monday, the two highlighted improving gaming demand trends in Macau for July, despite intensified efforts to curb illegal money exchange activities since June.

The Macau Business reported the analysts emphasising that most players in Macau have legitimate methods to transfer their funds, sufficient for high-stakes betting. “We continue to believe that most players in Macau have their own legitimate ways to get their funds over to Macau, sufficient for them to bet as much as HKD1 million (€117,470)/hand,” they wrote.

Chinese authorities intensify crackdown

China’s Ministry of Public Security has called for enhanced cooperation between security forces in Macau and the Chinese mainland to combat illegal money exchanges. These money changers, often found near Macau’s casinos, facilitate the movement of funds across jurisdictions, particularly between mainland China and Macau. Despite these measures, Citigroup’s observations suggest a resilient gaming market.

Last June, the South China Morning Post reported that Beijing aimed to break the “entire industry chain” related to the illegal money exchange business in the casino hub of Macau. The report said the central government sees managing financial risks, including illegal financial activities and tightening money outflow, as critical for the country’s future development.

Robust gaming demand in July

Citigroup’s data indicates a substantial year-on-year increase in the premium mass segment, with total wagers surging by 34 percent to HKD 12.2 million (€1.4 million) in July. This increase is largely driven by a 61 percent rise in the number of premium mass players.

The number of high-stakes players, or “whales,” defined as those betting at least HKD100,000 (€11,747) per hand, rose to 23 in July 2024 from 19 in July 2023. Notably, Galaxy and Sands China each captured a 25 percent market share of the premium mass segment, with 11 out of the 23 high rollers frequenting their casinos.

Expansion of smart gaming tables

Citigroup’s survey also noted the increasing implementation of smart gaming tables across Macau’s gaming floors. Galaxy Macau’s Pavilion South room, Sands China’s Apex Room at Plaza, and Wynn’s Encore have all seen additions of these advanced tables. The Venetian Macao now features 73 smart tables out of its 414 baccarat tables in the grind mass area, and Wynn has increased its smart tables to 30 out of 199 baccarat tables.

In April, the brokerage firm’s research revealed that RFID tables or smart gaming tables, represent approximately 10 percent of all tables in Macau. The report highlighted that in addition to speeding up gameplay, smart gaming tables offer a range of benefits, including data capture on player betting patterns. The report said the data enables more accurate player valuation and facilitates cost-effective player-comping strategies, enhancing overall operational efficiency and customer satisfaction.

Citigroup’s findings suggest that despite the crackdown on illegal money exchanges, Macau’s gaming sector remains robust. Most high-end players have legitimate ways to transfer funds, ensuring the continued flow of capital into the region’s casinos. As gaming demand continues to rise and the use of smart tables expands, Macau’s gaming industry shows resilience and adaptability in the face of regulatory challenges.

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