Not terrible but more evidence of a more competitive junket environment.
The data is in. With the enhanced disclosure from MPEL, we can confirm that while the sky isn’t falling, junket commissions did tick up in the 2H11. This is on top of a sharp increase in receivables – see our note this morning “MACAU: HIGHER RECEIVABLES”. On a positive note, commissions barely budged on a YoY basis.
The charts below show the composition by company of all-in commissions among 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.
- The gap between the lowest all-in commission rate and the highest commission narrowed considerably in 2011 to 4.3% from 6.7% in 2010 on a % of win basis and to 15bps from 18bps on a % of RC basis. The compression was largely driven by junket commissions
- Excluding comped non-gaming amenities (rooms/F&B), Wynn remains the least aggressive. However, on a YoY basis Wynn’s rebate and junket commission (as a % win) increased 5% and 1%, respectively, from 1H to 2H2011.
- We were surprised to discover that MPEL actually had the lowest all-in commission rate on both a RC and % of win basis in 2H12. Despite offering the largest junket commission, MPEL has consistently had the lowest comps on non-gaming amenities. MPEL also offered one of the lower rebate rates, which is surprising given the relatively large direct premium play business at City of Dreams.
- Rebate rates increased YoY and in the 2H of 2011 vs. the 1H
- The average rebate rate for the year and 2H was 32.4% (as a % of win) or 95bps (2011)/96bps (2H11) (as a % of RC)
- Wynn had the lowest rebate rate in 2011 at 30.6%/90bps
- MPEL had the lowest rebate rate in 2H11 at 30.0%/91bps
- Junket commission increased YoY and in the 2H of 2011 vs. the 1H
- The average junket commission increased 4% YoY (on a % win and RC basis) to 8.2%/24bps in 2011
- In 2H11, the average junket commission was 8.4%/25bps
- Wynn continued to offer the lowest commission rate in 2011 and 2H11
- 2H11: 7.2%/22bps
- 2011: 7.2%/20bps
- MPEL continued to offer the highest commission rate in 2011 and 2H11
- 2H11: 9.3%/29bps
- 2011: 8.9%/26bps
- Comped non-gaming amenities decreased YoY and but increased in the second half of 2011
- The average non-gaming comps fell to 9% on a % of win basis to 4.2% in 2011 from 4.5% in 2010 and 5.5% in 2009
- The YoY drop on a % of RC basis was 8% from 13bps in 2010 to 12bps in 2011
- In 2H11 the average non-gaming comps increased 8% and 11% on a % win and % RC basis, respectively, to 4.3%/13bps from 4.0%/12bps in 1H11
- MPEL continued to offer the lowest comps in 2011 and 2H11
- 2H11: 2.7%/8bps
- 2011: 2.6%/8bps
- LVS continued to offer the highest comps in 2011 and 2H11 which is not surprising given that they have the largest % of their revenue base coming from non-gaming amenities. Comps as a % of win and RC have been steadily declining from 2008 to 2011.
- 2H11: 6.3%/17bps
- 2011: 5.8%/17bps
- The all-in commission rate was flatish YoY but increased in the 2H of the year compared to the 1H to 46.5%/1.41bps
- On a % of win basis, LVS paid the highest all-in rate at 49.4% in 2H11 and 46.9% in 2011.
- On a % of RC basis, MGM was the biggest spender at an all-in rate of 1.41% in 2H11 and 1.4% in 2011.