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Total Macau Baccarat revenues fell 17% in February, driven primarily by a 20% decline in Rolling Chip (RC) turnover. The 17% drop actually improved sequentially from January’s 19% decline. I actually thought the volume decline would be worse considering the comparison. In the first half of last year, the junkets flooded the market with credit driving 30-60% monthly increases in Rolling Chip volume. Mass market revenue declined 6% in February.

In terms of total market share, LVS was the biggest winner, gaining over 300 bps of share sequentially, although still 400 bps below its December 2008 peak of 28.6%. Galaxy and SJM both gained over 100 bps of share. Galaxy has been on a little bit of a roll with its 2nd straight sequential gain and its 14.2% February market share was the highest since November 2007. The February losers were MGM (low hold % on the RC business) and Crown. Wynn Macau held fairly steady at around 16.2%.

On the super profitable Mass Market business, market shares were fairly consistent with prior months. The only real trends that appear to be emerging are the opposite paths of MGM and LVS. LVS lost a little bit of Mass Market share for the 3rd straight month while MGM gained share over the same time period.

Trends appear to be emerging in the RC segment. MGM and SJM are on the upswing, due in part to higher commissions paid to the junkets. MGM generated 250 bps of market share gains over the last two months. Revenue share would’ve also grown sequentially if not for an abnormally low hold %. LVS and Crown each lost share for the second straight month in RC.

All things considered, Macau seems to be doing fine despite the crazy RC comparisons and the stringent visa restrictions. We’ve been concerned with the RC comparisons, as we pointed out in our 01/08/09 note “MACAU: CREDIT A BIGGER NEAR TERM ISSUE”, but investors have finally discounted that and we can see the light at the end of the tunnel. Macau will lap the credit flood in September where last year’s comparisons actually turn negative. There is also a reasonable probability that the visa restrictions will be eased by then as Beijing may provide a tail wind for the new Macau Chief Executive. Macau remains the only worldwide gaming market with excess demand and we are sensing a turn to the optimistic side of the pendulum.