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There may be little correlation with VIP, but Macau visitation drives Mass revenues and profits.

The common held view is that gross gaming receipts in Macau bear little statistical resemblance to visitation growth.  Since VIP revenues are about 3x Mass revenues, that shouldn’t be a surprise.  However, visitation is hugely statistically significant in explaining Mass gaming revenues - with a t-stat over 7 and an R Square of 0.73.

Mass gaming revenue generates over 50% of Macau EBITDA so it is critical to profitability.  Regressing Macau EBITDA to visitation yields an even stronger statistically significant relationship with an R Square of 0.85.

The strong relationship can be seen in the chart below that shows 3-month rolling Mass gaming revenue and visitation growth:


It’s clear from the chart that both visitation and spend per visitor have grown nicely.  Visitation is the more important metric, in our opinion, for long-term growth.  We’ve consistently maintained that there remains a significant amount of untapped demand from mainland China and as long as visitation is growing, that should remain the case.