The 2018 record of Macau casinos experienced a dramatic plunge in the second half of the stocks of the top six homes after a sharp decline in valuation, triggering investor panic. The survey showed that the income from VIP players was rejected due to fewer tourists.
Macau is the capital of the world. Gambling and casino operations have a history of providing better returns than other places. However, revenue from VIP players, the most profitable customers, began to decline in the middle of last year. This caused the valuation of major casino stocks to drop sharply due to reduced growth prospects in VIP gaming revenue.
##How to operate the casino
Most casinos in Macau are based on the business model of attracting VIP players from the Mainland. These customers are called whales and play baccarat. In fact, VIP Baccarat is so lucrative, which contributes to over 56% of game revenue. The performance of VIP baccarat betting directly affects the valuation of Macau casinos in the stock market worldwide. Readers may ask, how VIP influences its outcome does not depend on the rewards of the skill game. It turns out that most of them are football fans. During the World Cup held in Russia, the whales stopped playing, preferring to watch the world’s best football players in action.
##Why baccarat is popular
The gambling house piles odds in their favor, so that they always earn more than the players. This dynamic, otherwise known as “family relationship”, is what makes the casino business worth billions of dollars. Because of this, it is impossible for players to have a big advantage in a house to win.
Baccarat is similar to roulette in that it does not require too much skill and the choice does not affect the player’s results. Its simplicity makes it a favorite of many players because what they do is place bets. Another attraction is that it has better odds than other games of chance.
## Business as usual
Macau as the world’s gambling capital is still healthy due to the huge flow of customers from mainland China. If there is anything, as the Chinese economy continues to expand, their disposable income is increasing, and the number of tourists is increasing. Recent data shows that customers are spending more than ever.
The sluggish stock price performance from June to July 2018 caused one of the investors to panic, but because all the fundamentals are great, this is just an aberration. However, over-reliance on VIPs has raised concerns about the sustainability of their business model. During this period, VIPs returned to play their favorite games, and stocks have rebounded.