What’s Ailing Las Vegas Sands’ Casino Revenues?

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Las Vegas Sands (NYSE: LVS) reported its third quarter results last week with its casino revenues shrinking by 4% to $2.3 billion. Macau’s gaming market has remained nearly flat this year due to stricter restrictions on foreign spending by the Chinese government and regional unrest from Hong Kong protests. The impact has been evident on Las Vegas Sands, a leading casino operator in Macau, with its casino revenues declining from $2.6 billion in Q1’19 to $2.3 billion in Q3’19. Trefis analyzes the impact of these short-term headwinds on Sands’ casino revenues and key operational metrics in an interactive dashboard, and believes that the company’s casino revenues should reverse its declining trend in a couple of quarters.

Breaking Down Las Vegas Sands’ Casino Revenues

  • Sands operates integrated casino resorts across three destinations: Macau, Singapore, and Las Vegas.
  • Macau contributes nearly 70% of Sands’ casino revenues.
  • Macau’s gaming operations can be categorized into rolling chip (VIP gaming) and non-rolling chip (mass gaming).
  • Rolling chip volume and non-rolling chip volume represents money spent on VIP table games and mass table games by tourists.
  • The casino earns about 3% of rolling chip volumes and 23% of non-rolling chip volumes, which is also known as casino win.

Impact Of Lower VIP Volumes On The Top Line Has Been Offset By Mass Gaming

  • VIP gaming has observed sharp declines due to stricter regulations by the Gaming Inspection and Coordination Bureau (DICJ) of the city’s junket operators.
  • Consistent with the overall Macau Gaming Market trend, Sands’ VIP gaming volumes fell from $22 billion in Q4’18 to $15 billion in Q3’19.
  • On the other hand, Sands’ mass market gaming volumes have been growing at a low single-digit rate.
  • The huge difference between mass and VIP gaming casino win percentage has helped insulate Sands’ casino revenues from the sharp declin in VIP gaming volumes
  • According to our estimates, LVS commands a ~40% share of Macau’s mass gaming market.
  • Considering Sands’ dominant position and a positive outlook for mass gaming segment from international bodies such as IMF, we expect LVS’ casino revenues to recover from the recent regulatory and political challenges.
Relevant Articles
  1. Down 13% In Last Six Months, Will Macau Recovery Over Q4 Drive Las Vegas Sands Stock?
  2. Las Vegas Sands Stock Has Remained Flat This Year Despite Macau Recovery. What’s Next?
  3. Macau Recovery Will Drive Las Vegas Sands Q2 Results
  4. Singapore Strength And Macau Rebound Drive Las Vegas Sands Q1. What’s Next For The Stock?
  5. Is Las Vegas Sands Stock A Buy With Macau On Cusp Of Recovery?
  6. Company Of The Day: Las Vegas Sands

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