Want to Find Out How Macau Gaming is Doing? Skip the Strip (LVS) (WYNN) (MGM)
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One key factor in determining how Macau's gaming scene is doing doesn't have much to do with land grants or airport activity.
It might have a lot to do with pawn shops.
Credit Suisse recently mulled that Macau gaming revs will top $44 billion in 2013, up 16 percent over last year. The rise won't be driven by VIP gamblers, or "Whales," but by the masses.
Unlike VIPs, 'Average Joe' gamblers don't have casinos falling over to loan them money to continue playing. Instead, travelers might go to a pawnshop, buy an expensive item using a credit card, and then trade the item in for cash. The pawnshops will keep a five or 10 percent commission for the service if items are exchanged immediately, Bloomberg noted today.
Mainland tourists are allowed to bring over 20,000 yuan (about $3,200) and withdrawal about 10,000 yuan per day. Many stay for just two days. The upper-end of the middle class usually plans will plan on a 500,000 yuan trip, betting about 2,000 yuan each hand.
Credit Suisse sees revenue growth from the mass market rising about 25 percent this year.
Unfortunately, there are no firm numbers on pawnshop revenue.
Standing to benefit from the practice are names like Wynn Resorts (Nasdaq: WYNN), Las Vegas Sands (NYSE: LVS), Melco Crown (Nasdaq: MPEL), and MGM International (NYSE: MGM), amongst others.
In 2012, VIP baccarat revs rose 7.5 percent to 210.9 billion patacas while other gaming revs increased 30 percent to 93.3 billion patacas (the official currency of Macau).
It might have a lot to do with pawn shops.
Credit Suisse recently mulled that Macau gaming revs will top $44 billion in 2013, up 16 percent over last year. The rise won't be driven by VIP gamblers, or "Whales," but by the masses.
Unlike VIPs, 'Average Joe' gamblers don't have casinos falling over to loan them money to continue playing. Instead, travelers might go to a pawnshop, buy an expensive item using a credit card, and then trade the item in for cash. The pawnshops will keep a five or 10 percent commission for the service if items are exchanged immediately, Bloomberg noted today.
Mainland tourists are allowed to bring over 20,000 yuan (about $3,200) and withdrawal about 10,000 yuan per day. Many stay for just two days. The upper-end of the middle class usually plans will plan on a 500,000 yuan trip, betting about 2,000 yuan each hand.
Credit Suisse sees revenue growth from the mass market rising about 25 percent this year.
Unfortunately, there are no firm numbers on pawnshop revenue.
Standing to benefit from the practice are names like Wynn Resorts (Nasdaq: WYNN), Las Vegas Sands (NYSE: LVS), Melco Crown (Nasdaq: MPEL), and MGM International (NYSE: MGM), amongst others.
In 2012, VIP baccarat revs rose 7.5 percent to 210.9 billion patacas while other gaming revs increased 30 percent to 93.3 billion patacas (the official currency of Macau).
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