Melco Crown Entertainment Ltd. (NASDAQ: MPEL) reported third-quarter 2014 results before markets opened Thursday. The casino and resort operator posted adjusted diluted earnings per American depositary share (ADS) of $0.24 on revenues of $1.12 billion. In the same period a year ago, the company reported per ADS earnings of $0.34 on revenues of $1.25 billion. Third-quarter results also compare to the Thomson Reuters consensus estimates for earnings per ADS of $0.31 and $1.19 billion in revenues. One ADS is equal to three ordinary shares.

The company attributed the revenue miss to lower group-wide rolling chip revenues, partially offset by improved mass market table games revenues. Rolling chip revenue is the technical casino term for VIP (high-roller) play. The VIP games are where Macau casinos have made their living for years.

Macau gaming control board reported a 23% drop in October gross revenue compared with October a year ago. Year to date, revenues are up 2.3%, but over the past five months revenues are down compared with a year ago, and the drop is getting bigger each month.

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The company’s CEO said:

In the third quarter of 2014, we delivered solid operating and financial metrics, despite a challenging rolling chip environment in Macau, driven by a strong performance in our mass market operations at City of Dreams in Macau. … City of Dreams continued to gain market share in the mass table games segment in Macau, with the property’s mass market table games revenues in the third quarter of 2014 increasing 24.0% on a year-over-year basis, outpacing the market which grew 16.2% during the same period.

For the fourth quarter, the consensus estimate for earnings per ADS is $0.36 on revenues of $1.34 billion. For the full year, per-ADS earnings are expected to reach $1.35 on revenues of $5.06 billion. How Melco Crown or any other casino operator will meet expectations given the downturn in Macau is a question investors might want to spend time pondering.

Melco ADSs traded up about 3.4%% in the first half-hour of trading Thursday morning to $25.14, in a 52-week range of $23.50 to $45.70. The consensus price target for the shares was around $38.50 before the report.

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