Gaming Inspection and Coordination Bureau (DICJ) figures released late on Monday underlined the reinvigoration of mass baccarat as VIP baccarat struggles to maintain the explosive growth rates that have driven the market in recent years.
Mass baccarat revenue for the quarter amounted to 15.131bn patacas ($1.89bn), an 8.5 percent gain on the previous quarter and a 43.3 percent jump year-on-year.
The quarterly gain was smaller than the 10.2 percent increase from the third to the fourth quarter, but still impressive against 1.1 percent quarter-on-quarter revenue growth to 74.314bn patacas for games of fortune, which refer to casinos and non-casino slots and mahjong.
The quarterly figure for Macau's gross gaming revenue (GGR), which includes greyhound and dog racing and lotteries, stood at 74.596bn patacas ($9.33bn).
Hong Kong-based Credit Suisse analyst Gabriel Chan said that improving mass market revenue can offset "disappointment" with monthly GGR results because slowing or negative growth in VIP revenue is offset by mass market revenue's higher EBITDA margin and better operating leverage.
"Although the headline GGR may look disappointing, it is not necessarily the case for operators’ profitability, since the mass-market segment commands a much higher EBITDA margin (about 35 percent versus about 11 percent for VIP)," he wrote on April 10. "That is, an additional $1 of mass-market GGR gain could offset an almost $3.5 shortfall in VIP GGR."
Chan said casino properties in Cotai district — now including Sands Cotai Central, which opened on April 11 — will enjoy a "continuous shift of market share from Macau Peninsula … particularly in the mass-market segment."
Such a shift has led analysts to look more favourably on Cotai operators Sands China, Galaxy Entertainment Group and Melco Crown Entertaintment, even if former monopoly holder SJM Holdings continues to lead market share with its swathe of properties on peninsular Macau and nearby Taipa.
Mass baccarat's outperformance saw its share of the games of fortune market rise from 19 percent in the fourth quarter to 20.4 percent, the highest level since the third quarter of 2009, while VIP baccarat's stake fell from 72.5 percent to 70.9 percent.
VIP baccarat revenue, meanwhile, suffered its first quarterly sequential retreat in three years at 52.678bn patacas, or down 1.1 percent, though the figure was up 23.7 percent on the same period in 2011.
Carlo Santarelli, a New York-based analyst with Deutsche Bank Markets Research, said in an April 9 note that lower hold was primarily responsible for VIP baccarat's fall and that rolling chip volume remained strong.
"While the … sequential decline in VIP revenue may appear concerning, we would point out that VIP rolling chip volume was up 3.5 percent sequentially as a sequential decline in VIP hold (about 3.10 percent in 1Q 2012 versus about 3.26 percent in 4Q 2011) was the driver of the decline," he wrote.
"Daily VIP rolling chip volume set a quarterly record in the 1Q and was up 4.6 percent sequentially from the 4Q 2011, which we note included the record-setting month of October," he added.
On a par with mass baccarat growth, slot machine revenue increased by a healthy 8.7 percent quarter-on-quarter to a record 3.306bn patacas, which was up 21.4 percent year-on-year.
A marginal increase in the number of slots in the market meant that the gain was largely attributable to per-unit performance, which saw a record of 205,316 patacas for the quarter, or a gain of 8.4 percent from the previous quarter.
The per-unit figure is crude as it does not account for changes to the numbers of machines within the quarter, but in any case a second consecutive jump in total and per-unit revenue has overcome two consecutive retreats in per-unit revenue that dominated the middle of 2011.
"Traditionally [growth] is heavily driven by VIP, but it's nothing unusual to say that the mass market is still improving across all the properties as well," said David Punter, general manager of the Asia-Pacific region for Aristocrat.
"I think you're going to get an increase [in revenue] again with Sands Cotai Central," he said, referring to the months ahead. "I'm not sure if it's going to dilute anything; I'd say you've got to look at a slight incremental but that's a personal opinion, it's yet to be seen."
The figures for less lucrative casino games were marked by big quarter-on-quarter falls in revenue for Western staples such as roulette (down 42.4 percent), craps (down 44.4 percent) and blackjack (down 7.1 percent), while Chinese games such as fantan and sic bo (listed as "cussec") rose by 14 percent and 4 percent respectively.
Most notable of the Chinese games was mahjong, which was boosted by new tables at Melco Crown Entertainment's City of Dreams casino. Mahjong revenue leapt 88.9 percent from the previous quarter to 51m patacas.
Live Multi Game, meanwhile, continued solid upward momentum with a 21.9 percent gain for the quarter to 139m patacas.
In pari-mutuel and lottery results, greyhound racing's declining fortunes continued with a 7.5 percent quarter-on-quarter fall in betting volume and a corresponding 6.9 percent fall in revenue. Revenue of 260m patacas amounted to a 28.9 percent drop year-on-year.
Horseracing also suffered, with a haul of 452m patacas amounting to a 15.4 percent drop in revenue over the previous quarter and a fall of 24.1 percent year-on-year.
Macau's instant lottery performed dreadfully in the first quarter, earning one sixth of the revenue reported in the last quarter of 2011, but the sports lottery monopoly fared much better, with sturdy year-on-year quarterly increases of 14.6 percent for football and 9.1 percent for basketball.
Quarterly Macau gaming data can be found here.