The numbers coming out of Macau right now are downright depressing. Gaming revenue has fallen for six straight months, dropping by double-digit percentages in each of the last three months.

No matter how you look at it, that is bad for gaming stocks Las Vegas Sands (NYSE:LVS), Wynn Resorts (NASDAQ:WYNN), Melco Crown (NASDAQ:MLCO), and MGM Resorts (NYSE:MGM), but it might not be as bad as it appears. Where the losses are coming in Macau is just as important as the size of the losses.

Las Vegas Sands The Parisian Rendering

Las Vegas Sands' The Parisian is one of a number of new resorts coming to Macau in the next two years. Image source: Las Vegas Sands.

VIPs are steering clear of Macau
Nearly all of the drop in gaming in Macau comes from high rollers known as VIPs. These players use junkets to act as middlemen between gamblers and casinos, providing credit for gambling and making it easy to pay debts in China rather than in Macau. The setup made for easy money laundering; but when China's central government cracked down on corruption earlier this year, surely some of Macau's VIPs were on the target list.

The result has been a rapid decline in VIP play, as you can see below.

Macau Gaming Revenue Per Quarter

Source: Macau Gaming Inspection and Coordination Bureau.

This chart might be alarming from a VIP perspective, but it also shows the other side of Macau's gaming market. Mass market players are still coming in droves, and for Macau's casinos that's where the money is.

Wynn Palace Macau Image

Renderings of Wynn Palace, under construction. Even Steve Wynn, who caters to high rollers, has been forced to move down market in Macau. Image source: Wynn Resorts.

Why mass market players matter more to Macau
VIP players drive most of the revenue in Macau, but that doesn't mean they're the most profitable segment in a casino. According to Las Vegas Sands, the mass market generates four times the profit as VIP play for every dollar in revenue. Part of the difference is the junket's cut, part is discounts for VIPs, and some comes from hotel rooms, entertainment and other perks given to high rollers.

Mass market players can't demand the same treatment and are therefore much higher-margin players. We saw the impact of these players in the third quarter, when gaming revenue as a whole was down, but EBITDA, a measure of cash flow from a casino, was only down slightly year over year for resorts operated by Wynn Resorts, Las Vegas Sands, and Melco Crown's. MGM Resorts' EBITDA was even up slightly.

As long as mass market players continue to come to Macau in droves, these casinos will remain highly profitable. Income might fall due to lost VIP play, but we're still talking about highly profitable resorts based on mass market play alone.

Gaming moguls believe VIPs will be back someday
If you believe Las Vegas Sands CEO Sheldon Adelson and Wynn Resorts' Steve Wynn, it's also a matter of time before the high rollers return to Macau. Both said this is a temporary setback, although neither really knows when the VIPs will be back.

At the end of the day, investors need to stay focused on the mass market in Macau right now. The headline numbers for overall gaming revenue have been gruesome, but that doesn't directly correlate to the bottom line, and that's what really matters when betting on gaming stocks.

Travis Hoium manages an account that owns shares of Wynn Resorts, Limited. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.