The data is in.



Despite the rhetoric, total commissions have not been rising in Macau.  Maybe they will if LVS turns aggressive next year (see our 08/29/11 note “LVS: SHOWING AGGRESSION”), but overall commission rates were down in 1H of 2011 both on a percentage of revenue and rolling chip basis.  The following chart shows the junket commission trends.  Note that hold percentage was below normal in 2009 which caused the spike in the blue line in that year since the junkets structured on a percentage of rolling chip still get paid the same amount regardless of hold.




The charts below show the composition, by company, of all-in commissions between the straight junket commission, the rebate that goes back to the player, and non-gaming giveaways.  The first analyzes the dynamics on a revenue share basis, the second as a percentage of rolling chip.  Two main takeaways:  Wynn remains the least aggressive – no surprise here – and higher commissions have not been the driver of the strong growth we’ve seen at City of Dreams. 


Here are our observations:

  • Wynn maintained the most profitable VIP business on the Street by the least to acquire it
    • Rebate rate of 85bps of RC or 30.5% of win in 1H11 (88bps/29.3% in 2010)
    • Junket commission of 20bps of RC or 7.1% of win in 1H11 (20bps/6.8% in 2010)
    • All-in rate including comps  of 118bps of RC or 42.35% in 1H11 (122bps/40.6% in 2010)
  • MPEL and MGM were tied in 1H11 for paying the most for their VIP business.  MGM had the highest on a RC basis, while MPEL got the top prize on a % of win basis. 
    • MGM paid the highest rebate rate of 106bps of RC or 35% of win in 1H11. MGM has actually had the highest rebates since 2008 (103bps/35% in 2010)
    • MPEL paid the highest junket commission of 30bps of RC or 10.8% of win in 1H11. MPEL has consistently had the highest junket commissions since 2008 (36bps/12.25% in 2010)
    • MGM had the highest all-in rate including comps of 140bps of RC in 1H11 (137 in 2010) while MPEL has the highest all-in rate including comps as a % of win of 46.7% (46.9% in 2010)
  • LVS hold the prize for deriving the largest % of its revenues from non-casino revenues, however, given the scope of their business they also have the largest non-gaming comps.
    • LVS non-casino comps were 16bps of RC volume or 5.3% of win in 1H11 (18bps/6.2% in 2010). LVS has consistently been the highest non-casino comper since 2008, however, comps as a % of win and RC have been steadily declining since 2008.
  • MPEL’s non-casino promotional expenses as a % of RC and win are the lowest on the street
    • Comps were 7bps of RC or 2.6% of win in 1H11 (9bp/3.1% in 2010)





Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more