Macau casinos re-open but business to be impacted

July 19, 2022 Poker table with chips

After more than a week of mandated closure, casinos in Macau opened again this weekend with a gloomy outlook for the immediate future. While the city state’s Covid control measures seem to have had the desired effect – Macau had just five new cases on Saturday compared to hundreds a day prior to the shutdown – business has been sluggish and is expected to continue that way for the moment.

A major element of the problem is that, with quarantine necessary for any new arrivals in the area, Macau’s attractiveness as a getaway for a weekend of casino gaming has evaporated, and when doors opened again on Saturday, the lack of customers demonstrated the extent of the problem. The vast majority of gaming halls are putting on limited gaming opportunities, with just a few tables open, to avoid burning through cash reserves – but industry takings for the year are expected to be approximately a fifth of what they were in 2019, the last year pre-pandemic.

While independent from the Chinese government in some senses, Macau is under the auspices of Beijing’s lawmakers when it comes to travel restrictions, and this has meant that the enclave has no choice but to implement limitations when mandated by the mainland. Travel, therefore, will only normalise when new infections stay at close to zero for a prolonged period. While the current low level is a good start, it will need to be maintained for at least a week longer before the mainland government is prepared to relax the remaining limitations.

At present in Macau, even after the reopening of casinos, social distancing regulations mean that only half of the staff can work at the same time. Tables and other surfaces must be regularly decontaminated, and any food bought on the premises must be consumed outdoors. Restaurants on the island remain closed to dine-in customers, while public transport, which has been greenlit for a return, must operate a policy of 60% occupancy.

The regulations are to be reviewed next on Friday, 29th of July. Stephen Lau, chair of the Macau Gaming Association, expressed pessimism that the island would see any substantial tourist influx before mid- to late August. This comes in the wake of an unsatisfactory first half of the year, when outbreaks on the Chinese mainland – from where most Macau tourism comes – heavily impacted the ability of casinos on the island to operate.

The most recent estimates, emanating from Morgan Stanley, are that this year’s total takings for casinos on the island may top out at or near $7 billion, a 35% drop on last year and an even bigger drop (81%) on 2019. With casinos often needing to pay millions of dollars just to operate for a day, there will be deep and growing concern about the sustainability of the present situation. For an economy whose health depends to such a great extent on casino tourism, Macau is experiencing what can only be described as an economic disaster.

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