How Coronavirus is Affecting Macau Casinos

Macau, the most lucrative gambling market in the world, was already down on its fortune when 41 casinos were directed to close their gates on 4th February for 15 days. Ultimately it was the inevitable move in a bid to help curb the spread of the Coronavirus that has already recorded over 70,000 infections and led to over 2,000 deaths in China to date.

For nearly 20 years, Macau has been a cash cow for the casinos in the region, generating five times as much revenue compared to their counterparts in the Vegas Strip as of 2018. Unfortunately, January 2020 spelt doom as the Coronavirus outbreak spread out from Wuhan to the rest of China and internationally.

The Corona Virus outbreak led to a decrease in tourists for the period of the Lunar New Year fete, which commenced on January 25. During the weeklong festival, the number of mainland Chinese visitors dropped more than 80%, with Macau recording a general visitors’ decline of approximately 78%.

Since mid-January, stock prices for the casinos’ units listed in Hong Kong have fallen sharply, and things got even worse when the shutdown began. While the casinos are expected to reopen by the end of February, Macau’s gross gaming revenue is likely to have plunged further by that time. In case the closure plan extends longer, the gaming revenue in the first quarter may well tumble by up to over 50% compared to the same period last year.

Complicated Logistics Worsen the Situation

Well, even if things go as planned and the properties in the Special Administrative Region reopen by the end of February, business there won’t be out of the woods yet. While administrative officers hope that business will get back to speed within 30 days, there are still a couple of issues that have to be addressed.

For starters, reopening of the casino doesn’t automatically imply that bettors will flock the gambling facilities as usual, unless local governments revoke the severe travel restrictions across the nation. Beijing, for instance, has put a stop to the process of issuing Visas for travelers going to Hong Kong and Macau. Hong Kong, on the other hand, has a heavily restricted passage from the mainland.

As we speak, just about 800 million inhabitants or over half the population on mainland China is under some kind of travel limitations. Given that these people are the biggest source of Macau gamblers, we expect the current status of Macau as a ghost town to prevail until these travel bans are lifted. On top of that, a two-week quarantine is being enforced for non-inhabitant employees and this might leave some casinos heavily understaffed should their operations resume.

To date, this 15-day closure is the second and lengthiest halt of operations in the gambling Mecca after a typhoon led to a 33-hour shut shutdown back in 2018.