Horrible Month for Macau's Gambling Industry

Macau suffered its worst financial month on record in April due to coronavirus lockdown measures.

The gambling mecca’s revenue dropped by a huge 97% last month to just US $95 million, down from the $3 billion made in April 2019. 

The decline even surpassed an 88% drop in February, when the tourist-dependent city was forced to close its casinos for two weeks.

It has continued to suffer since reopening due to lockdowns and travel restrictions across the world, despite the virus being largely contained in Macau. Even residents in nearby China were not permitted to enter Macau, leaving casino tables empty and operators out of pocket - reportedly losing more than $1 million every day.

Access was affected further when China’s Guangdong province implemented a 14-day quarantine rule in late March.

The financial results represent the seventh consecutive month of declining revenue for the city - its tourism industry had already been struggling due to a two-year trade war and political unrest in Hong Kong, as well as a huge growth in online casinos.

Melco Resorts & Entertainment, a larger operator of casinos in Asia, highlighted the damage to casinos across the world as lockdown measures and travel restrictions continued last month. The company announced it had been forced to cull its senior ranks, while chairman Lawrence Ho decided to forgo his salary for the remainder of 2020. In an internal memo, Ho wrote that the number of customers to the company’s venues has been “virtually zero” since reopening.

Melco also pulled the plug on plans to buy a stake in Crown Resorts earlier this year.

The industry could have now reached the end of its downward spiral, however, as analysts expect travel restrictions to ease further in May. 

MGM’s acting chief executive officer Bill Hornbuckle predicted casinos should recover by early summer, while investors also remain positive Macau operators will resume business as usual soon.

JPMorgan Chase & Co analyst DS Kim told Bloomberg casinos are likely to endure a daily loss of cash, with “ample liquidity to survive” in a time of near-zero revenue over a long period. He added that Galaxy Entertainment Group Ltd, with $6.8 billion in liquidity by December 2019, had enough financial stability to survive six more years of closures.

It is thought the return of Chinese visitors to Macau will bring the industry back to life as the mainland is the city’s largest source of VIP, big-spending gamblers. The return to gambling won’t be without its restrictions, however - Macau, like many casinos across the globe, has implemented strict health and safety measures to prevent the spread of the virus and protect both customers and staff.

Casino staff now patrol the gambling floor to ensure social distancing is being maintained, and limited numbers of players are allowed at gaming tables at any time. A baccarat table, for example, usually welcomes seven players. Now, and for the foreseeable future, only three are allowed to play.

Operators are also pushing hygiene, and ensuring all chips, seats, staircase railings, and tables are disinfected regularly. 

Dealers at Venetian Macau, the largest casino in the area, now tell punters to sanitize their hands every few rounds, while every other slot machine is turned off to promote social distancing.

It is vital the city returns back to normal as quickly as possible, as a huge 29.3% of Macau’s GDP comes from the tourism industry. The number was the third-largest in the world as of late 2018, overtaken only by the Maldives and the British Virgin Islands.

Some 24 tourists per Macau resident are normally present in the city at any one time - gambling in the casinos, drinking in bars, and enjoying the top-class eateries.