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Macau casino market suffers 18th straight revenue decline

Macau's 18th straight monthly gaming revenue decline wasn't a surprise, but the November results were worse than expected.

Casinos collected $2.1 billion from gamblers during the month, 32.3 percent less than a year ago, Macau's Gaming Inspection and Coordination Bureau said Tuesday.

The percentage decline was the ninth month this year that Macau gaming revenue fell 30 percent or higher.

"November came in weaker than modeled," said Deutsche Bank gaming analyst Carlo Santarelli.

It also appears the monthly declines aren't going away anytime soon even as Macau adds more casinos.

Las Vegas Sands Corp., Wynn Resorts Ltd., and MGM Resorts International operate casinos in Macau and are building multi-billion dollar resorts that are expected to open next year.

In October, Hong Kong-based Melco Crown opened the $3.2 billion Studio City development. Deutsche Bank gaming analyst Andrew Zarnett said the property hasn't grown the market, just taken business away from its neighbors.

"At this juncture, our investment thesis remains largely unchanged, as we continue to believe that while Studio City is not by any means a game changer," Zarnett said.

Meanwhile, Wynn Resorts delayed its opening of the $4.1 billion Wynn Palace on Cotai until June because of construction delays. The Parisian, Las Vegas Sands' 3,000-hotel-room, $2.7 billion development with a faux Eiffel Tower, is expected to open in the second half of 2016. MGM plans to open its $3.1 billion MGM Cotai by the end of the year.

For the year, Macau gaming revenue is down more than 35 percent compared to the first 11 months of 2014, when the market suffered its first-ever annual drop. Macau. the world's largest gaming market by revenue, produced a record $45.2 billion in gaming totals in 2013. The figure fell 2.6 percent in 2014.

With one month left in 2015, analysts see little hope for improvement.

Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said industry observer are monitoring how Studio City performs and Macau's visitor statistics.

"At this point, we believe most U.S. investors are looking out to 2016 and beyond when evaluating Macau operators' shares," he said.

Macau's gaming revenue declines began last year when the Chinese government started a crackdown on corruption that ensnared operators of high-end junket businesses tasked with bringing big spending customers to the Macau's private gambling salons.

In recent months, concerns have grown over table game allocations authorized by Macau gaming regulators to new casinos. Studio City, for example, wanted 400 tables and received just 250. Wynn Resorts wants 500 gaming tables for Wynn Palace, but had not been told how many the resort would receive for the 1,700-room resort.

Earlier this week, Macau media reported that regulators are continuing with plans to keep gaming table growth at 3 percent through 2020. A government official said table games will be allocated to new resorts based on various factors, such as creating partnerships with with small and medium-size local businesses.

Fantini Gaming research estimated the 3 percent cap would calculate to just under 1,100 tables for four remaining resorts planned for the Cotai Strip region, including the three casinos being built by the Las Vegas-based companies.

Also, Hong Kong's South China Morning Post said government officials confirmed the long-awaited Hong Kong-Macau-Zuhai bridge will not open until late 2017, a year after the current projected date.

The bridge would create the first automobile route from Mainland China to Macau.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Find @howardstutz on Twitter.

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