Yesterday, it was reported that the government of Macau will propose a bill that fully prohibits smoking within the premises of local casinos, VIP rooms included. According to Karen Tang, analyst at Deutsche Bank AG, VIP gaming is likely to drop by 15%, once the ban comes into effect.
Ms Tang pointed out in a special note on the matter that mass revenue has decreased between 10% and 15% since October 2014, when the new regulations that prohibited smoking on mass gaming floor were introduced. She suggests that a full ban might affect the VIP market in a similar manner.
Ms Tang also commented on the fact that Wynn Macau Ltd. and Galaxy Entertainment Group Ltd. will probably be the most seriously influenced gaming operators with venues on the territory of the administrative region.
As previously reported, the decrease in VIP revenue is one of the main reasons for Macau’s generally poor financial performance in the last several months.
Macau’s officials announced their proposal on the same day as the local Health Bureau released its review concerning the prohibition of smoking in particular public spaces. As the paper itself reminds, the ban was originally imposed in 2012 and its scope was widened in the years to come.
The review also points out that more than a half of Macau’s casino workers are not pleased with the fact that they have to work within premises where smoking is permitted. In addition, more than 75% of the administrative region’s residents champion a full smoking ban within gambling venues.
Alexis Tam Chon Weng, currently occupying the position of a Secretary for Social Affairs and Culture, shared that representatives from all six gaming operators that provide their services in the city asked for a permission to be able to keep their smoking lounges. It is important to note that these do not feature gaming tables and slot machines.
Analysts at Wells Fargo Securities LLC commented that Macau’s gaming industry might be influenced in a manner similar to what happened with the Australian Star City several years ago.
Back in 2007, a full smoking ban was imposed on the Australia-based gambling venue. And its revenues from mass tables and slot machines were reported to have fallen by 3% and 10%, respectively.
Grant Govertsen and Felicity Chiang, analysts at Union Gaming Research Macau Ltd., said that they believe the full smoking ban will not have such a significant impact that others predict. According to them, the current smoking regulation led to a 3% drop in mass market gaming revenue. The experts said that they expect similar decrease in VIP gaming revenue, once the new ban is implemented and provided that the smoking lounges are available.
They also predicted that the new law will probably come into effect no later than the first months of 2016.
