Casino feels pinch as high-roller bets decline

Soaring numbers of high rollers at Las Vegas Sands' casino in Macau appear to have plateaued as the company's turnover from VIP gaming suffered its first sequential decline, despite a record quarter.

Turnover of VIP gambling chips during the first three months fell 6 per cent from the previous quarter to US$3.94 billion, compared with a 4 per cent rise in the Macau high-roller market for the period.

Two rivals opened new casinos during the quarter.

Sands management said the casino was experiencing shortages of VIP table space.

'We remain capacity-constrained as we ramp up the VIP side of the business, particularly during peak playing times,' Sands president William Weidner told investors in a conference call yesterday.

The company is adding 16 tables or 30 per cent more space for high-stakes play later this month. It is also reassessing its network of junket operators - marketing agents responsible for bringing in and issuing credit to gamblers - to ensure that only the highest of high rollers receive the VIP treatment.

'[High-stakes turnover] is increasing rapidly as we get better at it, as we broaden our network and separate wheat from chaff and as we tell certain junket operators: 'Sayonara, because you're not bringing high enough quality customers,'' Mr Weidner said.

Despite the hiccup, steady growth in winnings from the mass-market tables and slot machines pushed net revenue at the Macau casino up 3.6 per cent from the previous quarter and 60 per cent from a year earlier to US$281.6 million. Adjusted earnings before interest, tax, depreciation and amortisation were US$103.26 million, up 2 per cent from the previous quarter and 53 per cent year on year.

The substantial increase from a year earlier was due primarily to growing VIP business, as Sands only formally launched junket programmes to lure high rollers in the first quarter last year.

Sands also operates a 4,000-room casino-hotel as well as a convention centre in Las Vegas but derives the majority of its revenue and profit from the 400-table Sands Macau casino.

Sands shares closed near record highs on Thursday at US$66.32, representing a price-earnings ratio of 82.9 times. The company is spending up to US$8 billion on Macau's Cotai development, which calls for 12 casino resorts and 20,000 hotel rooms.