Boston, MA 06/17/2014 (wallstreetpr) – The shares of Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) plunged by as much as 3% on Monday in New York over fears that the casino company is likely to see the sluggish rate of visitors, who will be drawn more towards the ongoing World Cup, taking place in Brazil.
World Cup Beating Down Casinos
The shares lost steam for the first time during the last week. According to an analyst at Sterne Agee & Leach, David Bain, the gross gaming revenues across casinos in Macau could see a downfall of around 8% this month as against the last year. Bain stated that the visitors are expected to watch the World Cup series that started on June 12, rather them participating in casino activities. Jeff Papp, who is a senior analyst at Oberweis Asset Management Inc. also stated his thoughts in line with that of Bain’s. Papp stated that the casinos are likely to feel the pinch in their top-line numbers during the current quarter as customers will move away from casinos to stay back at home and watch the World Cup. Furthermore, Papp said that the casinos could face challenge over a short term due to the stringent regulations on VIP spenders by the Chinese government, but see the picture bright over a longer term as mass market growth looks promising.
China’s Regulations
Of late, the Chinese government has imposed several restrictions on high profile spenders. The authorities are making it hard for bettors to buy expensive products in exchange of cash they win, in order to limit the cash flow to the globe’s biggest gambling hub. Apart from this, the statement made by the head of SJM Holdings Ltd, that the government is mulling plans to curb the use of some of the debit cards at casinos also indicate the country’s tightening policies. Cameron McKnight from Wells Fargo & Co. wrote that the year would be choppy for casinos.
