Made a quick one-day visit to Macau today and while Grand Lisboa was humming along with lots of gamblers at the tables, Wynn Macau was noticeably quieter, perhaps a lull in the late afternoon?
Nevertheless, there are concerns next year things will be slowing down in the former Portuguese enclave with the economy faltering on the mainland and also the government planning to put more restrictions on visas to Macau.
Wells Fargo Securities gaming analyst Cameron McKnight says in a recent report that an economic slowdown means growth of Macau's VIP segment "could well turn negative as VIP junkets would require a meaningful capital infusion simply to maintain current volume."
That's because the VIP segments makes up a mind-boggling 75 percent of the total revenue of the world's biggest casino market. McKnight says Macau has enjoyed two years of outsized market growth.
This area has surged thanks to junket operators who bring the high-stakes gamblers to the casinos, give them credit and collect their debts in exchange for hefty commission.
These were doing quite well until China's underground lending system exposed a number of defaults on loans, particularly in Wenzhou. A few businessmen there were reported to have disappeared or even committed suicide, unable to pay back the principle, let alone the exorbitant interest rates. And then there were some who thought they could win back their money if they went to Macau...
"Many VIP junkets have been obtaining money lender licenses in China as a means of legalizing their lending and collection activities on loans related to gambling, legally taking collateral over loans and preparing for the [junket] licensing process in Singapore," writes McKnight.
"Some junkets have been extending loans for purposes outside of traditional VIP gaming, which could mean they are more enmeshed with, and exposed to the same problems as, the shadow banking system."
Both scenarios mean less money will be reaching Macau if it's diverted to Singapore or further swallowed up by underground loan sharks.
However, Macau is still an allure to mainland Chinese not only for its plethora of gambling, but shopping as well. It is so geographically close to China, that the majority are still going to go there.
And with more properties opening up towards the second quarter of next year, such as InterContinental and Holiday Inn, and Sheraton in the third, there's still the cache of going to brand new places...
While there may not be 45 percent growth in revenue, it'll still be strong.