The Macau government says it expects gaming revenue in the world’s largest casino market to decline by 50 percent this year from 2019’s MOP292 billion (US$35.6 billion).
The estimate comes after gaming revenue plunged 87.8 percent in February when the government closed the casinos for two weeks to try to contain the spread of the coronavirus. Since then, tourism from mainland China, where the contagion is believed to have originated, is still largely at a standstill, which means March gaming revenue is expected to end in a comparable downturn, and an industry recovery is now likely to be months, rather than weeks, away.
Mainland China, the source of more than 80 percent of annual visitation to the city, is also the industry’s leading source of gamblers by far.
The casinos have since returned to near full gaming capacity, with 37 properties back in business and around 80 percent of their 6,700 table games back in operation. But as long as the Chinese government is suspending visas for individual and group travel, visitation to the city, which fell by 95 percent in February, isn’t expected to meaningfully improve any time soon.
The government expected to collect some MOP98.21 billion from taxes on gaming revenue in fiscal 2020 (US$12.27 billion), but with the casinos now expected to generate only around MOP130 billion (US$16.3 billion) in taxable revenue for the year, a budget deficit is all but certain, and the city is already planning to tap financial reserves to cover it.
The downturn also appears to be adding political pressure to the industry’s woes after Macau Chief Executive Ho Iat Seng publicly scolded the casinos last week for not volunteering hotel rooms to support a new set of strict quarantine measures imposed after a recent spike in coronavirus infections in the city.
To date, Macau has been spared the rash of infections that have devastated neighboring Hong Kong, but after local cases jumped the last two weeks from 10 to 25, the government quickly followed Hong Kong’s lead in banning entry from all countries outside greater China, including foreigners who hold non-resident work permits. This includes residents of Hong Kong, Taiwan and mainland China who have been in another country in the last 14 days. Residents of Hong Kong and Taiwan can enter but only after a 14-day quarantine at one of the eight non-gaming hotels designated for that purpose. The same applies to Macau residents entering from either jurisdiction, though not from mainland China.
Macau allows the government to requisition hotels in the case of emergencies, but Ho said he does not want to exercise that authority unless absolutely necessary.
“It would be much easier if we could find a hotel with 3,000 rooms,” he said. “We pay for the fees, we don’t ask to use them for free.”
He didn’t stop there. “The operators should reconsider what is the true corporate social responsibility,” he said. “CSR is not only about publicity in newspapers or donating several supplies to the public.”
He followed that with a warning, saying, “What the gaming operators have done, Macau residents see in their eyes and keep in their minds.”
With the city’s six casino concessions set to expire in 2022, it was a performance that was certain to resonate with them, especially when he added that he considers their cooperation during the current crisis an industry “exam”.
