Casinos in Macau reopened their door after nearly 2 weeks of shutdown as the Covid-19 pandemic continues to wreak havoc in the region. Due to crushing lockdowns and travel restrictions, the gaming mecca of the East has slipped behind Sin City in revenue.
After almost two weeks of a mandatory shutdown to curb a recent Covid-19 outbreak, Macau casinos are finally reopening their doors. The lockdown had earlier been set for one week but was extended by five more days as the city continued to report new cases of infections.
Macau’s government has reported that gambling activities will resume at the city’s several casinos subject to abiding by specific requirements to avoid further effects of the virus. These include ventilation and disinfection procedures that must be followed and a ban on any activities requiring customers and staff to operate without masks for long periods.
The announcement was made after the number of new cases dropped to fewer than 10 per day. This figure significantly improved from the 150 per day infection rate reported during the outbreak’s peak at the beginning of the month. Mandatory tests on the SAR’s 600,000+ residents will continue in compliance with China’s ‘Zero Covid’ policy.
Priority Given to Gambling, the Backbone of Macau’s Economy
The reopening of casinos and other gambling venues is only partial as other non-essential services like bars, nightclubs, cinemas, and eat-in restaurants will remain closed until further notice. Residents of the Chinese Special Administrative Region (SAR) are still required to stay indoors except for absolutely necessary activities related to work, medical check-ups and tests, and shopping.
Staff capacity at casinos has been curbed at 50%, and public transport has also resumed at 60% capacity. However, this first phase of reopening will be revisited on July 29, given how critical gambling revenue is to the special administrative region. For one, 80% of Macau’s income is collected from gambling activities which also means that in one way or another, a considerable percentage of the residents are employed in the gambling industry.
The industry has been the hardest hit in the recent lockdown as stocks plummeted and massive losses were reported. Analysts have already predicted that the revenue will continue to suffer well into the 3rd and 4th quarters of 2022.
Business Expected to Remain Low in Coming Weeks
Much as the casino operators have the green light to reopen and entertain customers in their respective premises with no specified limit to the capacity, there is a high chance that punters will be scarce. This is primarily because the current lockdown was also followed by travel restrictions, including mandatory quarantines for people traveling to the gambling enclave, which have not been lifted.
Therefore, visitors from the mainland and foreign tourists are highly discouraged from traveling to Macau, and casinos would not be able to operate at maximum capacity. These factors, of course, will significantly impact the expected revenue for the famed gambling mecca. Power of the Macao Gaming Association president Stephen Lau commented on the lack of visitors in the coming weeks, saying:
Quote“We won’t be seeing any tourists. At the rate things are going, tourists may not come back until mid- or late-August.”
To stay afloat, some operators have been implementing organizational restructuring procedures, including retrenching foreign staff, granting half-pay leaves, and encouraging early retirement by offering generous packages. Interestingly, the majority of the operators are foreign-owned, but the upcoming license expirations have made the situation even much worse as keeping local employees on the teams is more vital.
Sin City Leaps Back to the Top of the Gaming World
Macau has long since been the world’s gambling capital, but while the city was engulfed in the lockdown, Sin City, the former gambling queen, has risen back to the top. Business seems to be at an all-time high in Las Vegas as America’s gaming industry at large continues to breathe life into a robust post-pandemic future, to the point of beating Macau.
Macau’s slowdown is particularly dumbfounding given that in 2019, its revenue was six times that of Nevada’s gaming Mecca. The former Portuguese colony first beat the iconic Las Vegas strip at its own game in 2006 and significantly expanded the lead in the decade that followed.
However, mainland China and its SAR remain persistent in their Zero-Covid policy for a country free of the novel Coronavirus no matter the implications. This has resulted in several lockdowns since the start of the pandemic in 2020. Consequently, the Macau gambling scene has been marred by a significant drop in revenue, and things are expected to get much worse before getting better.
Morgan Stanley analysts have estimated that by Q4, the SAR will have collected approximately $7 billion, marking a 35% drop from 2021 and an 81% drop from 2019. In addition, the six licensed operators in Macau have reported a combined loss of $478 million in Q2 alone.
For operators like Sands, which sold its Las Vegas facilities to focus on the Macau market, times have never been more challenging. Industry experts are now watching the scene with bated breath for what will happen next and if Macau will indeed recover from its current ordeal to emerge at the top once again.
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