Sterne Agee CRT Warns Of Faltering Casino Industry

In a report published Monday, Sterne Agee CRT analyst David Bain reported that table-only gross gaming revenue in Macau, China between June 1 and June 7 was only $410 million, a 46 percent decline year-over-year. He expects a 33 to 38 percent year-over-year fall in revenue for the month.

Wynn Resorts, Limited (NASDAQ: WYNN), Las Vegas Sands Corp. (NYSE: LVS) and other large casino companies' heavy exposure to the Asian gambling metropolis has Bain feeling bearish on the industry.

He said the negative figures are especially concerning two weeks ahead of the scheduled opening of Galaxy Entertainment's Phase 2 casino. The 5-million-square-foot mega resort will likely be entering a low-demand market.

While Bain predicts that the Macau market will "generate sequentially ‘less bad' results over the course of the month," he still sees several reasons for caution, especially on the demand side. For one, Bain notes additional smoking regulations slated to be implemented by the Macau government this month, which could nudge away some patrons. He also said that additional VIP rooms in several casinos are to be "downsized or closed in the near to intermediate future," a symptom of low demand.

MGM Resorts International (NYSE: MGM), Wynn Resorts, and Las Vegas Sands were all down more than 3.8 percent Monday morning.