Macau Gaming Revenue is out of control
Quote: pacomartin...
17 Yonkers, N.Y. $540.50 million
...
OK, I'll show my ignorance. All I can identify in Yonkers is Empire City racino, and I had never heard of it. Is that one establishment really a bigger gambling market than all of downtown Las Vegas? Am I missing something?
Quote: DocOK, I'll show my ignorance. All I can identify in Yonkers is Empire City racino, and I had never heard of it. Is that one establishment really a bigger gambling market than all of downtown Las Vegas? Am I missing something?
It is quite possible that a single gaming establishment on the east coast makes more than all of Downtown Las Vegas. At the height of earnings in 2007 the three largest Atlantic City establishments had the following gaming revenue.
$750.967m Borgata
$641.418m Bally's
$583.338m Ceasars
$519.497m Harrah's
Yonker's Empire City has 5300 slot machines which means $100K per machine per year ($274 per day). The average return for the 26,789 slot machines in all ten casinos in Pennsylvania was $263.87 per day in February 2011. PARX casino in Philadelphia made $331.02 per slot per day.
Downtown Las Vegas has 11,649 slot machines which average about $88 per day. Downtown also makes $32K per day on 400 table games (Yonkers has no table games), but that does not make up for the much higher return on slot machines.
The Aqueduct Casino in Queens will have 4500 slot machines (no table games for now) will be a subway ride away for almost 8 million people. They are expecting revenue as high as $1000 per day per machine.
The East Coast casinos and racinos are very efficient money making machines for the state government. Almost all the revenue goes to the state. That's why the owners are having trouble making a profit. Downtown Las Vegas and North Strip are very inefficient. If Nevada increases the gaming tax by a few percentage points, it will probably put the older casinos out of business.
Quote: pacomartin
While the gaming revenue numbers seem massive for one area, they are still below the nationwide USA take for all the commercial casinos in the country. If you include lotteries, Indian casinos, bingo halls, and horse racing the USA is still way ahead. China is still well over four times the population of the USA.
It is just that legal gambling for the whole country is in a single city.
Mainland China also has state lotteries and government owned video gambling terminals that cater to the lower end of the market. Hong Kong also has the Hong Kong Jockey Club which has the monopoly on lotteries, sport betting and horse races betting in Hong Kong. According to Bloomberg about HK$105 million is bet on every race at the HKJC. That’s more than 50 times the average at U.S. tracks in 2010.
Here are some of the club's figures from 2009:
http://corporate.hkjc.com/corporate/operation/english/09-10-results.aspx
Overall, the Club's total turnover on racing, football and the Mark Six rose 7.1% to HK$116.93 billion while its share of gross margin grew 6.4% to HK$6.82 billion.
Quote: HKrandomMainland China also has state lotteries and government owned video gambling terminals that cater to the lower end of the market.
I stand corrected. I will modify my statement to say that China probably still falls far short of the nearly $100 billion that represents legal gambling in the USA.
From the American Gaming Association.
INDUSTRY 2007 GROSS REVENUES
Card Rooms $1.18 billion
Commercial Casinos $34.41 billion
Charitable Games and Bingo $2.22 billion
Indian Casinos $26.02 billion
Legal Bookmaking $168.8 million
Lotteries $24.78 billion
Pari-mutuel Wagering $3.50 billion
GRAND TOTAL $92.27 billion
With the average Vegas strip revenue $480m over the last year, it seems that Macau is now firmly at 5 times the level of the strip.
But it should still get a lot higher. The market also will benefit when Hong Kong-based Galaxy Entertainment opens a new hotel-casino in late spring.
In the calendar year 2005 Macau had gaming revenue of 47.134 billion Hong Kong dollars fairly close to the annual revenue of the Vegas strip (roughly $6 billion). At the time there were 17 casinos, 15 operated by STDM(Sociedade de Turismo e Diversões de Macau, SA ) who had the monopoly since 1963, 1 by Galaxy Entertainment Group (GEG) and the Venetian Sands .
GEG operated the Waldo Casino and hotel near the ferry terminal (opened July 2004).
However with new train service and new casinos, it is conceivable that they could do it this year.
Patacas (millions)
----- 2011 ------- 2010
Jan 18,571 13,937
Feb 19,863 13,445
Mar 20,087 13,569
Apr 20,507 14,186
May 24,306 17,075
That is 103,334 HKD in five months of 2011, vs 119,369 for all of the calendar year 2009 (or more than double the revenue in only 2 years).
Quote: pacomartin
Patacas (millions)
----- 2011 ------- 2010
Jan 18,571 13,937
Feb 19,863 13,445
Mar 20,087 13,569
Apr 20,507 14,186
May 24,306 17,075
And for June 2011 that's another 20,800 million patacas. The opening of new train lines now means that patrons can get from Beijing to southern China entirely by high speed rail. That is still the second highest month on record.
Although regular records aren't kept for the entire American Commercial Gaming industry, it would appear that Macau is competing comfortably with the entire USA industry. Even more dizzying heights are projected for the next few years. If there was competition from Singapore it barely registered on the meter.
| 2011 Macau | US$billions | US$ cum |
|---|---|---|
| Jan | $2.3 | $2.3 |
| Feb | $2.5 | $4.8 |
| Mar | $2.5 | $7.3 |
| Apr | $2.6 | $9.9 |
| May | $3.0 | $12.9 |
| Jun | $2.6 | $15.5 |
| Jul | $3.0 | $18.5 |
| Aug | $3.1 | $21.6 |
| Sept | ||
| Oct | ||
| Nov | ||
| Dec |
Revenue in Jul and Aug exceeded the Vegas strip for an entire year. With Sands Corporation getting only 14.2% of net revenue, and 10.3% of EBITDA from their Vegas properties, you wonder how long it will be before they dump their American investments.
Quote: pacomartin
Revenue in Jul and Aug exceeded the Vegas strip for an entire year. With Sands Corporation getting only 14.2% of net revenue, and 10.3% of EBITDA from their Vegas properties, you wonder how long it will be before they dump their American investments.
It's pretty crazy, but I can't imagine Sands Corp totally exiting the US of A. The American economy will eventually rebound, and the Macau/Chinese bubble will eventually pop (see Japan 1980's). Having diversified holdings is wise.
Quote: AyecarumbaIt's pretty crazy, but I can't imagine Sands Corp totally exiting the US of A. The American economy will eventually rebound, and the Macau/Chinese bubble will eventually pop (see Japan 1980's). Having diversified holdings is wise.
The bubble is still inflating. October revenue was $3.45 billion in one month, a new record. It was just a few months after breaking the $3 billion barrier.
Total for the last 12 months in Macau is US $33.66 billion . Revenue should take off next year as the new high speed trains begin service.
Quote: pacomartinThe bubble is still inflating. October revenue was $3.45 billion in one month, a new record. It was just a few months after breaking the $3 billion barrier.
Total for the last 12 months in Macau is US $33.66 billion . Revenue should take off next year as the new high speed trains begin service.
Who or what is profiting from these dizzying numbers? Are the Ho clan putting all this cash in banks around the world? Is the Chinese government building roads and schools?
Quote: AyecarumbaThe American economy will eventually rebound
Define rebound. It will never be anything close to what it
was. My house will never be worth what it was in 2007.
Quote: EvenBobDefine rebound. It will never be anything close to what it
was. My house will never be worth what it was in 2007.
Your house will surpass its 2007 value. It might be 100 years from now, but it will go up. Inflation alone will see to that.
Quote: AyecarumbaYour house will surpass its 2007 value. It might be 100 years from now, but it will go up. Inflation alone will see to that.
in housing, 40 years seems certainty, 30 yrs a safe bet, 20 yrs 'probably', 10 yrs 'likely'. We'll give Bob the benefit of the doubt on the 10 yr thing this time from 2007. However, it is my opinion that if we ever come out of this thing we will have a nasty bout of inflation.
And that all depends too, Detroit might not fit this for example.
Quote: odiousgambitin housing, 40 years seems certainty, 30 yrs a safe bet, 20 yrs 'probably',
I'd say 30 years and it will be back to where
it was. I don't care, we'll never sell, it would
be dumb. The mortgage was paid in 94, let
the kids worry about it.
Property going up is a relatively new thing.
Before WWII, if you bought a house in 1920,
in 1940 it was worth the same amount, if
you account for inflation. After WWII, its was
supply and demand and that bubble burst
in 2008. Before 1940, there were far more
landlords than home owners. Looks like
we might be going back to that. Bod Hope
and Bing Crosby were ahead of it in the 40's,
they invested all their money in Hollywood
real estate. Boy, were they right.
Quote: AyecarumbaWho or what is profiting from these dizzying numbers? Are the Ho clan putting all this cash in banks around the world? Is the Chinese government building roads and schools?
Quote: Taxation Research of MacauTaxation Research of Macau
The tax system of Macao is basically derived from Portugal. Amendments and improvements have been made constantly on the tax regulations in order to let the tax system adapt more closely to the Territory. As the tax system of Macao is territorial in nature, all activities of commercial or industrial nature which are being conducted in the territory are taxable.
The tax system of Macao has an attractive characteristic of the lowest tax rates as compared to other South East Asian countries. In fact, as the Territory is still in the developing stage, low tax rates are essential for attracting foreign, as well as local investments. The main reason why such low tax rate can be maintained is that direct and indirect taxes are not the principle components of total public revenue. High tax rates and as a result, large tax revenues are what is often seen in other countries. But in the case of Macao, the major source of public revenue comes from revenues from franchises granted, which are actually the rent, the complementary tax other revenues collected from the gaming industry. With the gaming industry supporting most of the Territory’s revenues, the tax burden on local and foreign business and economic activities is highly bearable due to the benefits derived from low tax rate. As a result, the economy of Macao has been developing at a remarkable speed.
The taxation of casino sub/concessionaires in Macau is currently of 35%, plus two contributions of up to 2% and 3% for social and economic purposes. The maximum tax is therefore 40%. In addition, a fixed premium is also payable, plus a premium per VIP table, other table, and slot machine. Gaming promoters pay taxes on commissions received.
Casino tax was USD 5.4 billion in 2008, accounting for 70% of total Macao government revenue. Tax Revenue must be approaching $12 billion in 2011. I would think some of this windfall has to be going to the federal government.
Singapore
(Adjusted) Gross Gaming Revenue (GGR) generated from premium players will be taxed at 5% while GGR from all other players will be taxed at 15%. (A premium player is a person who maintains a deposit account with minimum amount of $100,000 before he starts playing any game in the casino. )
Singapore also levies a Corporate Income Tax of 17%.
The government of Singapore treated gaming as a way of bringing revenue to the entire city state, and increasing tourism. Similar arguments were used in Nevada , New Jersey, Mississippi, Colorado, and Oklahoma. Other states treat casinos more like lotteries, where the casino is in partnership with the state,
Effective Tax Rates in 2008
8.0% Nevada
9.5% New Jersey
12.0% Mississippi
12.4% Colorado
14.4% Oklahoma
15.0% South Dakota
16.1% Montana
22.9% Iowa
23.5% Louisiana
23.6% Michigan
26.0% New Mexico
26.3% Missouri
31.0% Indiana
35.9% Delaware
36.1% Illinois
45.2% West Virginia
47.1% New York
47.3% Pennsylvania
49.6% Maine
50.0% Florida
65.3% Oregon
74.3% Rhode Island
Source for Casinos and Racinos: American Gaming Association, State of the States, 2009
Macao Government also exempts many other taxes such as corporate income tax, equipment and facilities import tax, etc. The Lease land at a very low rate and provide free dealer training. The Central Government of PRC keeps demand high by not permitting any casinos in Mainland China/Hong Kong, and allowing the “Individual Travel Scheme”, which is relatively unique in China (as opposed to group travel). In addition they are building a solid transportation infrastructure.
In theory as the Chinese population ages and get wealthier, they should produce the same number or more international tourists out of the total population of 1400 million people as Germany does out of the total population of 80 million. China seems determined to keep tourism domestic as much as possible. Logically, you would think that a lot of it would spill into Vietnam, Thailand, Guam, and the Phillipines following the same economic laws that govern western tourism.
Even more expansion is predicted for next year.
And if that happens...what will happen to the profits of these Macau casinos that thrive off of the corrupt elite.
Quote: mike650iGiven the prospects of a Chinese hard landing, the massive corruption in China, and the fact that the country is well...not a democracy by any stretch, I wonder if the chance for civil unrest/revolution are real.
And if that happens...what will happen to the profits of these Macau casinos that thrive off of the corrupt elite.
Jan 13,937
Feb 13,445
Mar 13,569
Apr 14,186
May 17,075
Jun 13,642
Jul 16,310
Aug 15,773
Sept 15,302
Oct 18,869
Nov 17,354
Dec 18,883
Jan 18,571
Feb 19,863
Mar 20,087
Apr 20,507
May 24,306
Jun 20,792
Jul 24,212
Aug 24,769
Sept 21,244
Oct 26,851
Nov 23,058
Dec 23,608
Jan 25,040=$3.229 billion
January returns are up another +34.8% from the previous January. A new monthly record.
It's hard to imagine. But if like Vegas revenue went back four years that would mean massive riots in Macau.
Anyway, I'm thinking that with the current state of the US (and World) economy, there should be some easy low-buys right now that will return a decent profit over the next year or so, more than just buying an index fund like I did before.
After reading this thread I am tempted to buy some LVS, WYNN, and even MGM due to the crazy growth in Macau. Am I crazy? I will probably also buy another S&P500 index fund over the same period, just to compare.
Of course, after reading this thread, I'm convinced that pacomartin is a secret agent for the Macau casino corporations, disseminating these figures all over the internet so people will invest :)
I am still trying to figure out if Paco is a person or an internet search engine .
and all of the casinos in Vegas made 9.2 billion? WTF?
How is that even possible. What about the Wynn Macau?
Quote: pacomartinThe insane levels of growth are not exactly a top secret. The news release from LVS was titled: Las Vegas Sands Corp. Reports Landmark Fourth Quarter and Full Year 2011 Results; Fourth Quarter Net Revenue Increases 26.3% to Record $2.54 Billion;
Sands cleared over a billion dollars from Macau casino operations only in just one quarter.
Venetian Macau $641.3 million
Sands Macau $311.9 million
Four Seasons Macau $183.7 million
Marina Bay Singapore $654.0 million
Las Vegas Operations $118.3 million
Pennsylvania Sands $97.9 million
Sands casino operations only
$2.007 billion last quarter
$7.437 billion for calendar year 2011
Compare that to the unrestricted licenses in all of Clark County (Vegas strip, Boulder strip, Vegas urban area, Laughlin, and Mesquite)
$2.351 billion last quarter
$9.223 billion for calendar year 2011
In only 1989 the Sands Casino was purchased by the owners of The Interface Group - Sheldon Adelson, Richard Katzeff, Ted Cutler, Irwin Chafetz, and Jordan Shapiro. On November 26, 1996 the Sands was exploded in a bold move.
Haha, dude, you do know you do kind of sound like a search engine?
Quote: sunrise089Paco, what's the one-sentence explanation for the Maccau profits? ..
Degenerate Asian gamblers. As Laurie C. would say..
Quote: sunrise089Paco, what's the one-sentence explanation for the Maccau profits? I assume it's MUCH higher average bets. I doesn't seem to be hotel or restaurant revenue, and considering the low number of slot machines I don't know if there can be that many more total players either...
Obsessive baccarat play.
Total number of hotel rooms in Macau is in the low 20 thousand, compared to about 150 thousand in Las Vegas. Stays in Macau are even shorter than Las Vegas, and total visitors are about half as many as Las Vegas. There are just a lot of people who come for the day and play 8 hours of baccarat. Even worse, they treat it like an investment, and they fund a consortium that sends someone to play with your money. So they play a negative expectation game as an investment with no entertainment value. The last idea is the craziest thing I've ever heard. I mean I will concede the fact that some people like to spend two hours playing the big wheel of fortune. I figure that if they find that entertaining, who am I to worry about the House Advantage. But the idea of giving large amounts of money to someone else to play for you is insane.
So, Macau revenue is almost entirely gaming, and 90% is from baccarat.
==================
Incidentally, if I just found data that is ready made to make a point, I would just provide a link to it. A lot of times I pull numbers from half a dozen different places and combine them to reach a conclusion. I have been quoted in the Las Vegas Review Journal well over a dozen times, so I do try to provide some analysis.
Not every time, of course. Sometimes I am clearly just passing on numbers.
Quote: pacomartinand they fund a consortium that sends someone to play with your money. So they play a negative expectation game as an investment.
I see this a lot at Four Winds. They bus the Asian players
in from Chicago and some guy who has $18 worth of
clothes on, has a couple thousand in cash. The local
merchants and businessmen in Chicago's Chinatown pool
their money and make this guy the designated player.
There's always a few others with him to to make sure
he's honest. I suppose they win sometimes but I've
never seen it. They're erratic bettors and what they
do makes no sense.
Quote: WongBoMaybe they just watch the game and record the decision and use that information to overcome the house edge.
If they were doing that, they'd be winning more. I've
never seen players lose like bac players do, they lose
it by the bucket full. Thats why Macao is doing so well
with fewer visitors than Vegas. They lose lose lose..
Quote: EvenBobThats why Macao is doing so well with fewer visitors than Vegas. They lose lose lose..
The Macau non-gaming revenue is relatively small, but not non-existent. Macau is up to 28 million visitors last year, compared to Vegas 39 million. Clark County non-gaming casino revenue was $10.76 billion (of which $4.01 billion was rooms). Macau is up to $5.84 billion non-gaming (roughly $200 per visitor).
The true gap is probably wider since Clark county has tourist business outside of the casinos.
But those 28 million visitors to Macau are losing money gambling at $3.2 billion for January 2012. Strip visitors lost about $6 billion in a year 2011 (down from a high of $7 billion).
like they do here, you'd get laughed at. The Asian's consider
gambling to be a very serious business, even though they play
negative expectation games. Thats like saying you consider
flushing money down the toilet to be 'serious business'.
Quote: buzzpaffI am still trying to figure out if Paco is a person or an internet search engine .
Either that or there is more than one of him.
Sure covers a lot of ground.
Announcements and Notices - [Final Results / Dividend or Distribution / Closure of Books or Change of Book Closure Period]
ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2011
http://www.hkexnews.hk/listedco/listconews/mainindex/ipmpnews.asp?id=001359585
- Gaming revenue earned by Sociedade de Jogos de Macau, S.A. (¡¡¡ÓSJM¡ÆØ), a subsidiary of the Company, grew by 32.0% to a record HK$75,514 million.
- Adjusted EBITDA of the Group grew by 42.5% to a record HK$6,923 million.
- Profi t attributable to owners of the Company grew by 49.1% to a record HK$5,308 million.
Quote: winmonkeyspit3I am still very confused by all of this. I know a lot of players bet very largely and end up busting their bankroll, but all players combined have an unlimited bankroll so wouldn't the casino only make 1.xx% per bet in the long run (more if player is stupid enough to bet the tie)? I believe this is correct as someone previously explained that a slot machine with 100.00% payback would not profit from players busting their bankroll in the long run.
No you are not confused. The final return of the casino is the house edge time "the amount bet". But the "amount bet" is many times larger than the "drop" as gamblers normally re-bet their winnings.
It is commonly believed that the casino will make money because they can't go bankrupt, while a player can lose his bankroll. However, that assumption is not mathematically valid.
The key to Macau's huge earnings is the willingness of the average Chinese player to sit at the table and bet and re-bet for significantly longer than the average Western player. Most casinos have the goal of getting a Western player to gamble for four hours a day.
Quote: pacomartinThe key to Macau's huge earnings is the willingness of the average Chinese player to sit at the table and bet and re-bet for significantly longer than the average Western player. Most casinos have the goal of getting a Western player to gamble for four hours a day.
Somebody here mentioned that calling gambling entertainment
would be confusing to the average Chinese player. They take
baccarat very seriously.
Gambling's Biggest Prize
The premise of the article is that China will eventually legalize gambling on the mainland, and Wynn and Adelson are doing their best to be prepared when it does happen. Meanwhile, MGM Grand is already building a resort hotel on the island of Hainan, with everything EXCEPT gambling.
I thought it was a good read.
Macau is expected to come in well over the 20,087 million patacas from March 2011, but still under the record breaking 26,851 million patacas from October 2011.
$3 billion US = 23,293 million patacas.
$10.862 billion is gaming revenue for the entire state of Nevada
But Sands® Cotai Central, will officially open on Wednesday, April 11, 2012 so April will probably break the record again.
$3.32 was the gaming revenue for Atlantic City in the year 2010 (and still going down),
$3.00 billion US = 23,293 million patacas.
So we will shortly be at the point where Macau has greater revenue in one month, than AC has in a year.
Quote: pacomartinSo we will shortly be at the point where Macau has greater revenue in one month, than AC has in a year.
How many car thieves, crack sellers, hookers, pickpockets and panhandlers and crooked politicians does Macau have?
Quote: calwatch
U.S. authorities are investigating his company’s compliance with the Foreign Corrupt Practices Act.
That is a good article. I have always wondered if Sheldon would just sell his American interests and just leave the country if they are hassling him. The American operations are only a small part of the company, and with the new casinos opening, that percentage is shrinking.
I am staying in Wynn Macau and really like the VIP typed of casino.
Could the "out of control" growth be coming to an end? As an investor in a few casino companies that operate in Macau, I hope not! But you can't keep up those insane growth numbers forever.
If it kept going at 70%-90% you would be talking about an incredible amount of money being spent.
That is $37 billion US dollars in earning in the last 12 months. Assuming a 20% win rate, that is about $185 billion dollar drop in a year. The total of all the cash in China is about $600 billion. So that number is fairly incredible.
| Month | Patacas Increase | Percent |
|---|---|---|
| Jan | 5,362 | 62.50% |
| Feb | 5,533 | 69.90% |
| Mar | 4,038 | 42.40% |
| Apr | 5,846 | 70.10% |
| May | 8,276 | 94.10% |
| Jun | 5,373 | 65.00% |
| Jul | 6,740 | 70.40% |
| Aug | 4,505 | 40.00% |
| Sept | 4,359 | 39.80% |
| Oct | 6,269 | 49.80% |
| Nov | 5,139 | 42.10% |
| Dec | 7,536 | 66.40% |
| Jan | 4,634 | 33.20% |
| Feb | 6,418 | 47.70% |
| Mar | 6,518 | 48.00% |
| Apr | 6,321 | 44.60% |
| May | 7,231 | 42.40% |
| Jun | 7,150 | 52.40% |
| Jul | 7,902 | 48.40% |
| Aug | 8,996 | 57.00% |
| Sept | 5,942 | 38.80% |
| Oct | 7,982 | 42.30% |
| Nov | 5,704 | 32.90% |
| Dec | 4,725 | 25.00% |
| Jan | 6,469 | 34.80% |
| Feb | 4,423 | 22.30% |
| Mar | 4,902 | 24.40% |
| Apr | 4,496 | 21.90% |
| May | 2,674 | 11.00% |
