HALISTER1: MACAU GAMING STREET WRAP: Weak Start to June Amid New AML Rules

MACAU GAMING STREET WRAP: Weak Start to June Amid New AML Rules

(Bloomberg) -- Macau gross gaming revenue for June is tracking to fall from 2% to as much as 13% Y/y, according to four analyst estimates. BERNSTEIN (Vitaly Umansky)
  • Macau’s gaming regulator tightened anti-money laundering rules for casino, junket operators on May 13; weren’t previously published
  • New set of rules more than doubles number of provisions included in AML instructions; didn’t change threshold of “large” transactions (500,000 patacas - $62,500) required for casinos to report to government authorities
CITI (Anil Daswani)
  • Weak start to June perhaps driven by luck, poor weather
  • Tightened anti-money laundering rule doesn’t have any impact on mass market business
  • New rule another negative to “decimated” VIP business
CREDIT SUISSE (Kenneth Fong)
  • Revised anti-money laundering rules to significantly increase documentation; should have limited operational impact
  • New procedures will probably hurt small junkets which lack resources for compliance
  • Disappearance of smaller junkets, which make up 25% of junket business, could slow VIP recovery despite better China liquidity
  • Weaker June revenue due to telephone betting ban, seasonality, Euro cup
HSBC (Charlene Liu)
  • June seasonally weak month for gaming rev.
  • Poor weather conditions may have continued hurting casino traffic
  • Sees short-term volatility for Macau gaming sector
  • Prefers Galaxy Entertainment, MGM China
NOMURA (Richard Huang)
  • Previous expectation of growth in June now seems unlikely
  • More time needed to gauge whether softer performance during first week of June was because of recent phone-betting ban and implementation of new UnionPay terminals, or because of GGR volatility
  • Still likes MGM China
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Vitaly Umansky (Sanford C Bernstein & Co Inc)
Anil Daswani (Citigroup Inc)
Charlene Liu (HSBC Securities Asia Ltd)
Kenneth Fong (Credit Suisse Holdings USA Inc)
Richard Huang (Nomura Holdings Inc)

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