United States-listed Macau plays Las Vegas Sands, Wynn Resorts and Melco Crown Entertainment will start the earnings reporting season as early as this week, and few are expecting the numbers to look good. But despite Macau casino revenue contracting during the fourth quarter for the first time in at least 3 1/2 years, analysts are hoping for a few positive surprises because of shifting market shares and individual cost-cutting measures. 'With gaming revenue growth turning negative, it is no longer possible for all casino operators to report earnings growth,' Credit Suisse gaming analyst Gabriel Chan wrote last week in a research note. Beijing's nine-month-old campaign to restrict the number of visits mainlanders can make to Macau has coincided with a painful credit crunch in the city's dominant VIP gaming segment to bring a dramatic halt to a five-year winning streak that saw the city's casinos overtake winnings on the Las Vegas Strip and Atlantic City combined. Gaming revenue in Macau has now fallen for three consecutive quarters and suffered its first year-on-year contraction during the three months to December. With January's 17 per cent drop, the steepest to date, year-on-year casino revenue has declined in four of the past five months. Coupled with an even sharper slowdown in Las Vegas, Macau's slowdown is likely to drag down fourth-quarter earnings for casino operators. Macau operations account for more than 50 per cent of revenue and profit at both Wynn and Las Vegas Sands. However, despite the challenges, analysts see potential for some positive surprises from the coming earnings releases. Most operators have responded to the downturn with a series of cost-cutting measures. Aside from junket commissions, which must be paid at market rates or top-line revenue suffers, the biggest cost component that operators can control is labour. Layoffs and pay cuts were introduced on a mass scale in the fourth quarter. Las Vegas Sands Corp laid off as many as 11,000 construction workers in November after the credit crisis forced it to suspend work on a 6,400-room resort complex opposite the Venetian Macao. Melco Crown imposed a temporary 7 to 8 per cent pay cut for about 3,600 employees at its Crown Macau casino hotel from December 1. Las Vegas Sands followed with its own 13.3 per cent pay cut for 6,800 local gaming employees, whose working hours were reduced by four days each month from January 1. The US firm also laid off 500 foreign staff. Galaxy Entertainment followed with an effective 13.3 per cent pay cut for 2,400 local gaming staff that took effect at the beginning of this month. 'Lower labour costs should help casinos to improve margins,' JP Morgan gaming analyst Billy Ng wrote in a research note. Junket commissions, which at the high end can equal up to 48 per cent of casino revenue, are generally paid on a sliding scale depending on how much business each junket agent is able to bring in. However, because of the financial crisis, many junket operators are extending less credit to players owing to fears over bad debts, and as a result some may fall short of delivering enough volume to earn top-bracket commission rates. While the fourth quarter saw no resort openings, there were some changes in market share that will also affect the operators' earnings. And there is also the luck factor to be considered - the win rate, or what percentage of VIP chip wagers the casinos managed to win back.