Macau’s casino industry reaped just $410 million in gross gaming revenue (GGR) for the month of May, the second-lowest total since September 2020 and a year-over-year decline of 68 percent.
But the numbers were up 25 percent over April, sparking some analysts’ hopes that the city’s fortunes will improve as Covid-19 restrictions are relaxed in Shanghai and Beijing.
In a note to investors, Stifel Financial gaming analyst Steven Wieczynski wrote, “If you’re looking for any kind of good news, it does seem that certain jurisdictions inside of China are slowly starting to ease up on some of their restrictions.” He added that the worst may be over for Macau and its No. 1 industry.
May data was released June 1 by Macau’s Gaming Inspection and Coordination Bureau (DICJ). Financial news service Seeking Alpha reported that the Big 6 casino concessionaires—including U.S.-based operators Las Vegas Sands, Wynn Resorts and MGM Resorts International—continue to “burn cash” as they wait on the recovery. Morgan Stanley and Goldman Sachs estimated that operators spent an average of $12 million a day in the first quarter.
In light of the ongoing contraction, Macau Chief Executive Ho Iat Seng said the government will lower its previous 2022 forecast of MOP$130 billion in GGR, according to Inside Asian Gaming. GGR from January to May this year has totaled only MOP$23.79 billion (US$2.97 billion), down 44 percent from 2021, plus a monthly run rate of just MOP$4.76 billion (US$595 million). If this trend continues for the balance of 2022, total GGR for the year would reach just MOP$57.12 billion (US$7.14 billion), less than half the original estimate.
Ho said visa restrictions for travel to Macau could be eased later this summer when the pandemic situation in Mainland China is under control. Macquarie Securities gaming analyst Chad Beynon advised Macau investors that 2022 will likely be “a transition year with minimal free cash flow.” He added that visitation through April was a mere 18 percent of 2019 levels.
Macau posted a gaming revenue record of $45 billion in 2013.
“We still believe there won’t be any signs of a material recovery in the market until sometime in early 2023,” Wieczynski told investors. “We believe the near-term outlook for Macau remains murky at best and the rest of the year from a gaming revenue perspective should be written off by investors.”
Rob Goldstein, chairman and CEO of the Las Vegas Sands Corp., remains bullish on the market and seems confident that all six Macau casino concessionaires will see their licenses renewed at the end of the year. “The license issue—which was a big issue a year or two ago—it’s much more comfortable today for all of us—for every licensee,” Goldstein said at the 38th Annual Strategic Decisions Conference, organized by brokerage Sanford C. Bernstein.
He told Bernstein analyst Vitaly Umansky, “The government has provided us with a lot of guidance. I won’t publicly talk about what’s happening in the inner circle, but I think all the operators have been rewarded for their patience and persistence, going through this whole thing. That ‘switch’ will go on when it goes on. We can’t predict. We’ve … experienced 24 months of confusion and frustration.”
The Sands honcho said the group is still committed to reinvestment in Macau after revamping a number of properties in its portfolio. “We’ll be doing the Sands [Macao] in downtown at some point, we hopefully will be adding some capacity,” he said.
Goldstein also addressed concerns about the government’s decision to turn away frequent gamblers trying to visit the city. “I think the visa concerns… are tied to Covid and the general belief that it’s not the right time to travel outside of borders of China,” he said. “I think that all goes away once the Covid issue is resolved.”
He said local authorities want a “well-run, well disciplined, well-regulated market with lots of investment, and there will be lots of growth in Macau for those who play the game properly. I’m a huge believer in China, and the resurrection of the market.”
Umansky maintained his estimate for June at an 80 percent decline compared to 2019.
