GGRAsia – 80% of APAC VIP business lost since 2019, according to Morgan Stanley

80% of APAC VIP business lost since 2019, according to Morgan Stanley

The Asia-Pacific (APAC) land-based casino market has lost around 80% of its VIP gaming revenue since 2019, says Praveen Choudhary (pictured), analyst at Morgan Stanley Asia Ltd.

Much of the fall was due to the absence of big Chinese players, he added during a presentation on the first day of the casino industry Global Gaming Expo (G2E) Asia 2022. conference and exhibition in Singapore Wednesday.

Revenue from this segment has grown from about “$20 billion to $4 billion” since 2019, he told the audience. A heavy blow was taken by Macau, which in 2019 accounted for around 67% of the Asia-Pacific VIP segment, according to data presented by the analyst.

“The reason this market was lost was because it was very high-end Chinese consumers, coming to Macau,” he said. Much of this VIP activity “in my opinion has been lost forever,” the analyst suggested.

He added: “It may not come back because junkets won’t be allowed to operate like they did in Macau before.”

Mr Choudhary also observed: “The majority of VIP customers are from China, and because China is completely closed for people to come and go…we saw a massive drop between 2019 and 2022.”

He also acknowledged that “there has been a crackdown on VIP business” in terms of Chinese public policy.

Referring to the opportunities for casinos in the region of get high-end customers from Southeast Asia and other markets in the region, he said ASEAN-based VIP customers “could be something that everyone will fight for, and we’ll see when Macau opens up, how much of this percentage will go to Macau”.

He added that “at the peak of the cycle in 2013”, VIP revenue accounted for 73% of Macau’s gaming market, but that had “decline over time”. For this year in Macao, it was “only 16%”.

Even with a general recovery in Macau’s gaming market, “we don’t expect VIP to exceed 20%” of Macau’s gross gaming revenue (GGR) “in the future.”

When asked if part of the Asia-Pacific VIP gambling market has shifted to online, Choudhary noted, “The appetite is there in Asia,” in general terms for online gambling, “but it was never legal. In fact, China is extremely against it.