Macau Revenue Drop Shows Coronavirus Results

When Macau was confronted with the coronavirus and its potential spread, its government did something entirely unprecedented. It closed all casinos in Macau for more than two weeks. Macau knew the economic damage that would probably ensue, but the safety of people was more important.

As Macau now reveals the revenue losses from that time period in February, it is a sober look at what the rest of the world will face in the coming months. Australia just ordered all of its casinos closed within the past two weeks, and the order could be in place for months. Macau presents a glimpse into Australia’s gaming revenue future.

Macau’s Moves

The Chinese territory of Macau made the unprecedented decision to close its 41 casinos when 10 people in the whole of Macau had been diagnosed with the coronavirus. One was a hotel worker. While the numbers were not staggering, Macau just witnessed how fast the virus spread through areas of China and didn’t want to take any chances.

To stem the spread, Macau Chief Executive Ho Iat Seng held a televised news conference to announce the closures. He anticipated the economic losses, knowing that gambling is responsible for four-fifths of Macau’s overall revenue, but he knew it was necessary to preserve the health of the people of Macau.

Casinos closed by February 5. With no new infections discovered in the first 13 days of the closures, the government gave the okay. Casinos reopened on February 20.

Some casinos reopened with limited operations, while others took significant precautions for increased safety as they opened their doors.

Traffic through the casinos and to/from Macau remained slow due to visa and transportation restrictions. Mainland China remained under fairly strict rules, as did some surrounding countries.

Terrifying February Revenue

When the Gaming Inspection and Coordination Bureau (DICJ) reported February’s gross gaming revenue on March 1, the numbers were low. While many expected dismal numbers, it was more difficult to handle them in real life.

Gross gaming revenue in February sunk 87.8% year-on-year. Analysts had anticipated an 80% drop, but the MOP3.1 billion figure (approximately US$386.7 million) was startling. It looked even worse when compared to the MOP25.37 billion from February of the previous year.

Remaining Difficulties in March

This week, the DICJ released the March numbers, which were nearly as bad as the previous month.

March gross gaming revenue was down 79.7% year-on-year to just MOP5.3 billion (approximately US$664 million). Analysts had predicted this drop of 80% to 82%.

Sadly, however, gross gaming revenue increased only 69.4% from the previous month – the worst in Macau’s history.

Many factors contributed to the continued economic suffering in March, not the least of which was the continued travel restrictions by China itself. And visitors from Mainland China generally contribute to 90% of the gaming revenue of Macau.

Macau issued its own travel restrictions, banning travel from Mainland China, as well as from Hong Kong and Taiwan. Macau Public Security Police reported only 230-270 tourists per day during the ban, while Macau typically saw 100,000 visitors per day in 2019.

Very Slow Recovery Expected

Each month going forward in 2020 will likely improve somewhat, unless there is another outbreak of COVID-19.

Improvements will be relative, however. Australia just began to restrict its travel – while closing down all of its casinos and most non-essential businesses in late March – and Japan is implementing similar restrictions. Great Britain, Canada, and the United States are in virtual lockdowns, as are most parts of Europe. Vietnam, Cambodia, South Korea, and the Philippines face similar restrictions.

Some governments did not take action as soon as Macau. Rather, they witnessed much greater spread of the coronavirus before taking serious action. This means it will take much longer to slow the spread and handle the illnesses already settled in.

Australia Taking Notes

Casinos in Australia know that they could be shuttered through April, and possibly longer. And upon reopening, there will likely be required restrictions and limitations.

JP Morgan analysts predict an even further drop for Macau in April, despite only a two-month shutdown in February. “April could possibly be the worst month since the Vegas-type casino opened in 2004,” several analysts said.

Sanford Bernstein estimated April gross gaming revenue to be down 87% to 92% year-on-year. Those analysts commented. “The gaming operators and other Macau-based contacts we have spoken with do not see any clarity on timing of recovery.”

Losses may continue to worsen before they improve. As evidenced by Macau casinos, some are spending millions of dollars per day just to stay open, but they are taking in much less revenue.

Investment banks predict that Macau revenue will end the 2020 year down nearly 50% and won’t fully recover in 2021, remaining down by 10% to 15%.

Australia will have a tough road ahead as well. It is difficult to predict how tough, though.

 

Rose Varrelli

Rose Varrelli has always been passionate about online casinos, as she's been a player at a variety of places for years. Rose turned her personal knowledge and insight into a writing career. She aims to provide readers with the most up to date, informative news in the world of online casinos!

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