Macau Unlikely to Consider Another Round of COVID-19 Casino Closures

Posted on: July 26, 2021, 04:30h. 

Last updated on: July 26, 2021, 02:41h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

While coronavirus case counts are ticking higher in mainland China, it’s unlikely Macau authorities will revert to another casino shutdown. That’s unless there’s a major outbreak in the special administrative region (SAR).

The world’s largest casino center was the first major gaming hub to implement temporary closures of gaming venues at the height of the coronavirus pandemic, doing so in February 2020. This was more than a month before US-based properties followed suit. In fact, by the time Macau’s 15-day shutdown ended in February 2020, US casinos still hadn’t shuttered.

Globally, there have been 194 million documented COVID-19 cases resulting in 4.16 million deaths, according to Johns Hopkins University Center for Systems Science and Engineering (JHU CSSE). However, just 59 cases occurred in Macau, with no fatalities.

In a recent research note, Bernstein says Macau officials are unlikely to pursue another shutdown unless COVID-19 cases there spike in dramatic fashion. It’s been 484 days since the SAR had a locally transmitted case. 

Low Expected Outbreaks

The 2020 gaming halt was just the second in Macau’s history and lasted far longer than the 2018 iteration, which was deployed in response to Typhoon Mangkhut. That one lasted a mere 33 hours.

It’s estimated that the coronavirus shutdown cost the SAR’s six concessionaires a combined $100 million per day. With the rebound slower-than-expected, but with gross gaming revenue (GGR) figures finally showing signs of life, the local government may be loathed to order casino closures unless it’s absolutely necessary.

Despite the Macau Health Bureau reporting that more outbreaks are likely, Berstein says these outbreaks are expected to be small.

We expect the local transmission likelihood to be low,” Bernstein said in a note. “While it is possible an infection pops up out of this and causes a few days of disruption in Macau, an outbreak at this stage that would close Macau or significantly disrupt travel is a low probability.”

However, Macau is still taking precautions. Ferry service between that SAR and Hong Kong remains suspended, and establishing a travel bubble between the two SARs remains an elusive objective. Hong Kong serves as a thoroughfare for up to 15 percent of annual visits to the gaming mecca.

Gaming Data Encouraging

To this point, June was the worst month of 2021 in terms of monthly GGR in Macau. But data suggest a rebound is afoot this month. Bernstein estimates mass market GGR is up 30 percent on a month-over-month basis, while VIP hold is higher by 20 percent.

For the week ending July 22, visits from neighboring Guangdong province jumped eight percent. However, there are concerns that a recent rise in COVID-19 cases in that region could stall the near-term recovery.

Undoubtedly, concessionaires want to avoid that let down, because as things stand today, many analysts are wagering Macau GGR won’t return to pre-pandemic levels until 2023 or 2024, likely lagging Las Vegas in the process. At the start of the health crisis, analysts widely speculated Macau would be the first major gaming market to rebound. But that hasn’t been the case.