Morgan Stanley analysts recently made a trip to Macau to take a firsthand look at its struggling gaming industry. According to a new report by analyst Praveen Choudhary, Macau casino operators have little cause for optimism at this point.

Here’s a breakdown of Morgan Stanley’s key takeaways from the visit.

Liquidity Challenge

Under increasing pressure from falling revenues, Macau casinos have started to be much tighter with credit. Less credit means less liquidity for junket operators, and VIP rooms have been closing up shop as a result.

With VIP revenue still accounting for about 50 percent of total gross gaming revenue in Macau, the continued closure of junket rooms could provide strong headwinds for operators in upcoming months.

Battle Over Lower-End Customers

In an effort to make up for slipping VIP numbers, casino operators have been lowering…

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