Nevada Pays a Price for Bad Chinese Markers
The Macau situation we reported on last month is getting worse. Macau gaming revenues grew only 1.5% in June, the slowest growth rate in three years, according to this Las Vegas Review-Journal article. And based on data from both the Wynn and Las Vegas Sands, more of China’s whales appear to be flying to Vegas to gamble.
In its latest Securities and Exchange Commission filing, 75.6% of all wagers on Las Vegas Sands’ Vegas table games were made on credit issued to whales. This is the highest whale credit number reported by LVS in at least eight years. It’s five percentage points higher than 2011 and up more than ten percentage points over 2010′s credit numbers.
Meanwhile, LVS’ whale credit in Macau has been shrinking. In the last quarter only 31.2% of table game wagers were made on credit, down from the 36.9% average in 2010.
In its most recent quarterly filing, Wynn reported that 82% of its table game markers were issued to non-US citizens, primarily from Asia. That’s seven percentage points higher than the same quarter last year.
The casinos benefit when whales chose Vegas over Macau. For one thing, the gaming tax in Macau is 12% versus Nevada’s 6.75% gaming tax. But there is another tax advantage. If the whales default on their markers in Vegas, the casino companies don’t have to pay taxes on the gaming revenues generated by those markers. In Macau, they do.
It may also be an advantage for China’s whales to play in Vegas. Macau junket operators, a primary source of whale funding,
break legs are known to be more vigilant about collecting on bad loans.
The only real losers in the Chinese whale migration may be Nevada tax payers who, in effect, subsidize bad whale credit.