The first three months of 2020 have seen gaming revenues in Macau plunge 59.9 percent compared to last year as the world’s largest casino market remains largely shut off from its China lifeline.
The 39 casinos in the territory are open, with Macau one of the few gaming jurisdictions on the planet to be transacting business in the midst of the Covid-19 pandemic. But gaming floors are all but deserted since individual travel from China and all group travel have been suspended by the central government.
The market was closed for two weeks in mid-February. Since reopening, it’s been operating with limited capacity under social distancing requirements that restrict the number of gaming tables, the number of available seats per table, and the numbers of active slot machines.
Macau’s casinos generated a world-leading US$35.6 billion in 2019 from some 40 million visitors, upwards of 70 percent of them from mainland China. Most of those came from the populous neighboring province of Guangdong, which has added to the industry’s woes by enforcing a mandatory 14-day quarantine on all mainlanders returning from the gambling hub.
Revenue in the first quarter totaled MOP30.64 billion, $3.84 billion in U.S. dollars, less than 11 percent of last year’s annual haul. VIP baccarat, which comprises nearly half the market, came in at MOP14.81 billion ($1.85 billion), down 60.2 percent from 1Q19’s 37.21 billion. Mass market revenue from the game fell a comparable 59.3 percent and saw its share of total win dip from 42 percent in the fourth quarter to 39 percent.
Mass gaming as a whole, including slot machines and other games, comprising slightly more than 51 percent of the market, was down from MOP38.94 billion in 1Q19 ($4.87 billion) to MOP15.68 billion ($1.96 billion), a fall-off of 59.7 percent.
April isn’t expected to help either, with analysts predicting total win to plummet by more than 90 percent for the month.
“We expect GGR to pick up again in May/June with loosening travel restrictions, but any strong near-term recovery is unlikely,” said brokerage Sanford Bernstein.
Meanwhile, Macau Chief Executive Ho Iat Seng said his administration will negotiate with Beijing for a reinstatement of individual travel visas so mainland residents can visit the territory again.
“The gambling and tourism sector is a pillar industry, a competitive industry and also a dominant industry,” he said, “driving the development of other sectors, providing economic foundations that guarantee the maintenance, in Macau, of a reduced tax burden and its status as a free business center.”
He said the impacts of the pandemic serve as an urgent reminder of the need for Macau to diversify away from its dependence on gaming. It’s a mantra that’s been heard frequently both locally and in Beijing over the years, but with little concrete evidence of its achievability anytime in the foreseeable future.
“Everybody wants a diversified economy, but no one can (achieve this) because there are just some factors that do not exist,” said local economist Albano Martins. “In Macau, we have very few people and some are not even the best ones for some of the industries. We need to get trained and have a lot of experience so we can have other successful industries.”
