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China – Studio City to cease VIP gaming with tables likely to move to Morpheus

By - 16 January 2019

Macau casino operator Melco Resorts and Entertainment has confirmed it will cease offering VIP gaming at its Studio City casino in Cotai on January 15 in 2020.

The casino originally opened as a mass only gaming floor in 2015 before decding it needed VIP customers just over a year later. Analysts believe the VIP tables will be relocated to the group’s Morpheus casino at City of Dreams.
The decision comes just over two years since Studio City introduced VIP play, having originally opened as a mass-only property in 2015.

Studio City generated a VIP rolling chip volume of US$5.1bn in the third quarter of 2018, having a produced a similar amount for the period in 2017.

Melco Resorts said in a SEC filing: “Studio City International Holdings Ltd today announced that Melco Resorts (Macau) Ltd has informed the company via its subsidiary, Studio City Entertainment Ltd, that the gaming operator will cease VIP rolling chip operations at the Studio City casino on January 15, 2020.”

Whilst Melco gave no reason for the decision, Japanese brokerage Nomura speculated on the rationale: “Studio City’s leased VIP tables generated only 10 per cent to 15 per cent of estimated property-level EBITDA [earnings before interest, taxation, depreciation and amortisation] (approximately US$40m in 2018). Melco Resorts believes the tables will generate greater volume if repositioned, probably at Morpheus where premium mass demand has been strong.”

Analysts Harry Curtis, Daniel Adam and Brian Dobson added: “Shifting 30 higher-margin tables to mass and 15 higher-volume tables to VIP,” could help increase Melco Resorts’ EBITDA “by US$20m to US$30m Further, Melco will retain 100 per cent of the EBITDA on the 45 tables. Today it is obliged to allocate 46 per cent of the profits to its minority partners” at Studio City.”

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