An estimate for Macau gross gaming revenue (GGR) from VIP gaming just took a substantial hit. According to the Japanese brokerage Nomura, the VIP GGR estimate for next year was slashed in half, falling from 14% to 7%. The brokerage is concerned over the “recent flattening of volume growth from junkets,” which resulted in the estimate update.

Nomura also dropped the Macau GGR forecast from 14% to 9% through the end of 2020. This was done to “reflect a more sustainable mid-single digit increase in VIP demand and low-double digit mass growth.” According to Nomura analysts Daniel Adam, Brian Dobson and Harry Curtis, they based their analysis on conversations held with executives from different Macau casinos. If there is any consolation, it is that this year’s VIP revenue forecast by the brokerage comes in at $21.20 billion, an increase of 13% year-on-year.

There has been a slight decrease in revenue during June and July this year, brought about in part by the FIFA World Cup playoffs taking place in Russia. Tak Chun Group, a major junket company operating in Macau, said that the soccer tournament has had a “slight impact” on its business, but the impact was in line with what has seen during previous World Cup competitions.

The analysts based their results, in part, on the current political tension between the US and China and the accompanying trade war. They said, “Geopolitical uncertainty in China is high due not just to the brewing trade war, but also because of Beijing’s efforts to rein in excessive company leverage. On the downside, if last week’s imposition of a US$34-billion bilateral tariff [between China and US] increases toward US$100 billion, then we’d expect economic (and junket) activity to contract further.”