Macau casino operators learned lessons from “junket commission price war”

As to a Citigroup report, the six casino operators in Macau have not participated in any excessive or inappropriate market-buying activities since they learnt from their mistakes during the “junket commission price war back in 2008-09”.

The operators don’t seem to be in an aggressive pricing war since they seem to have learned from past efforts to sign up VIP players sponsored by junkets.

Citigroup analysts George Choi and Ryan Cheung noted in the paper that, despite recent industry worries about prospective rises in the cost of doing business as a consequence of competition for premium players in a market with fewer junkets, there is no sign of operators behaving irrationally.

Analysts estimated that in the fourth quarter of 2023, Macau’s industry EBITDA (profits before interest, taxes, depreciation, and amortization) would reach US$1,951 million, up 6% from the previous quarter. Additionally, they anticipated that throughout the same period, the industry EBITDA margin would be comparatively steady at around 28.5 percent.

According to Citigroup, variations in market share are more closely linked to quarterly volatility in EBITDA margins when it comes to the success of individual operators than the amount spent on player reinvestments. Additionally, Sands China Ltd. and Galaxy Entertainment Group Ltd. lost market share to smaller operators, according to Citigroup’s prediction of the industry’s fourth-quarter 2023 profitability.

While Citigroup accepts that the bulk of market share advances in the fourth quarter were due to chance, it predicts that these short-term gains will result in more resilient EBITDA margins for MGM China Holdings Ltd, Melco Resorts & Entertainment Ltd, Wynn Macau Ltd, and SJM Holdings Ltd.

Original story by: GGRAsia