Published: 17.04.2020, 12:19
3 min read
On January 22nd, 2020, the self-governing city of Macau announced that it had its first confirmed case of COVID-19. The city is the world’s largest gambling hub, and the majority of its revenue comes from its highly frequented casinos. These gambling venues are required to stay open 24/7 every day of the year. However, in February, Macau’s government did something unprecedented: they called for a two-week shutdown of the city’s casinos. Altogether, 41 casinos were impacted.
After the two weeks had passed, the casinos were required to reopen their doors. However, revenue was sorely impacted because tourists simply were not coming to Macau anymore. The number of the city’s daily visitors went down by 98% when compared to this time last year.
To make matters worse, the COVID-19 infection rate of Macau has risen once again. The uptick is still considerably smaller than the first round of infections, but it is still large enough to sway tourists away from visiting this city. Macau is not going to close its casinos this time. The government’s choice to keep the venues open isn’t to meet gambling demands, but rather to provide workers with income.
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Even though the casinos must remain open, there are some new regulatory conditions in order to curb the coronavirus’ spread. For instance, only half the tables on the floors may remain open. Patrons will also be monitored in order to ensure that they are not standing too close together. On top of that, staff and guests must wear masks and undergo temperature checks.
Lei Wai Nong, who is the city’s Secretary for Economy and Finance, made a public statement on April 2nd. Nong said that casinos cannot close without a government mandate, even if they agreed to still pay the workers’ salaries during a closure. Nong continued on to say that the city’s government currently has no plans to shut down the casinos again. This is because the gaming industry provides employment for over 58,000 Macau citizens.
Macau’s Year over Year (YoY) gross gaming revenue was down by 87.8% in February and 80% in March. The numbers are projected to be even lower in April due to the additional cases of COVID-19 in the city. However, the city’s government has not included casinos in its stimulus package. MOP10 billion, which is the equivalent of $1.25 billion, has been set aside to assist local businesses during this global health crisis. However, according to company analysts, Macau’s casinos are above water financially and don’t require assistance. These analysts concluded that the casinos have enough liquidity to survive medium-term impacts up to six months in length. After this point, the venues would then need to utilize debt financing, but would still not require assistance. In fact, all operators could survive for 15 months without government assistance. The only exception to this is Studio City, which has less liquidity, so it could only last for about 12 months.
On the other hand, casinos have stated that they are losing out on anywhere between $1.5 million – $2.6 million on a daily basis. This loss is mainly due to keeping their full staff on the payroll even though there are very few customers frequenting the venues.
