Pandemic hit revenues hard

Gross gaming revenue for casinos in Macau in May was a little more than MOP1.76bn ($220.9m), indicating a year-on-year drop of 93.2%. The regulator for Macau’s casino sector, the Gaming Inspection and Coordination Bureau, released the figures on Monday. 

very small number of VIP players, leading to high levels of volatility

The results for May were slightly better than the estimated 95% decline for the month after polling was previously conducted by Bloomberg. There was a seven-day period between May 18 and 24 when the average daily rate of gaming revenue in Macau was in the negative at about minus MOP25m ($3.13m). According to Sanford C. Bernstein analysts, the decline was due to casinos having a very small number of VIP players, leading to high levels of volatility.

A poor year to date

Macau’s gross gaming revenue shows an increase of 134% in May after gaming revenues fell year-on-year by 97% in April.

The travel bans imposed during the coronavirus pandemic have resulted in a significant decrease in visitors to Macau. In 2020 to date, overall revenue declined by almost 74%, with accumulated revenue for the first five months amounting to MOP33bn ($4.13bn). Casinos had to shut down for a 15-day period in February, with properties recently reopening with reduced gaming capacity.

GDP dropped by almost 49% year-on-year in the first quarter

Macau’s gross domestic product (GDP) dropped by almost 49% year-on-year in the first quarter in 2020, according to a report issued by the city’s Statistics and Census Service on Saturday. This is the fifth consecutive quarterly decline in Macau’s economic output, which relies on the casino industry for the bulk of employment and revenue.

Travel restrictions remain

Despite Macau not having confirmed any cases of coronavirus since the beginning of April, there are still travel restrictions in place. As Hong Kong and the mainland are major markets for the city’s casinos, such restrictions have proved to be a major cause of the revenue decline. 

Those traveling between Hong Kong and Macau must undergo a mandatory 14-day quarantine period for both sides of the trip. While those from mainland China can go to Macau and not have to comply with any quarantine period on arrival, they will have to self-isolate when they return to the mainland. 

The authorities in China are also putting restrictions on issuing visas for mainlanders who are looking to go to Macau. Anyone who gets visa approval will need to go through COVID-19 testing before they can enter Macau.

What the future holds 

JPMorgan Securities (Asia-Pacific) brokerage believes a “travel bubble” plan relating to the Guangdong-Hong Kong-Macao Greater Bay Area will be announced at some stage in early June. The communication could be made close to June 7, the expiration date for the mandatory quarantine period in Hong Kong. 

“travel bubble” plan relating to the Guangdong-Hong Kong-Macao Greater Bay Area

This would be a significant step towards Macau getting somewhat back to normal, with Hong Kong and Guangdong providing most of the visitors to Macau. JPMorgan anticipates that the rest of mainland China will gradually ease its restrictions towards the end of July or the beginning of August.