Analysis | Gaming: Border entry restrictions thought to smother first signs of recovery

New border entry restrictions implemented last week across the greater China region threaten to smother the first signs of recovery in yet another stress test for Macau’s battered casino economy.
A mandatory 14-day quarantine for almost any traveler crossing the border between the three regions of Macau, Hong Kong and Guangdong Province has quashed the possibility of a tourism-led recovery in the second quarter. That’s bad news for many local businesses struggling to stay afloat even as the local government led by Chief Executive Ho Iat Seng readies another round of economic relief measures.
Macau is highly dependent on its gambling industry, which directly accounts for about half of gross domestic product and indirectly influences most of the remainder of the economy.
Under the new policy implemented Friday, mainland residents that visit Macau or Hong Kong must undergo a 14-day quarantine upon their return to Guangdong Province. With few people expected to endure a two-week quarantine back in Zhuhai, the number of tourists is projected to drop again to near-zero levels.
The Gaming Inspection and Coordination Bureau is expected to release gross gaming revenue data for the territory tomorrow, giving some insight into how the local economy has responded a partial shutdown of economic activity across the globe in March.
Gross gaming revenue in February plummeted 87.8% to just 3.1 billion patacas on the back of a collapse in visitor arrivals caused by the Covid-19 coronavirus and an unprecedented decision to mandatorily suspend all casino activity for a period of 15 days.
Earlier in March, gaming analysts had converged on a projected decline in gross gaming revenue of between 75% and 80% for the month. With gross gaming revenue a year earlier amounting to 25.8 billion patacas, a year-on-year decline of 75% would leave the month tally at just under 6.5 billion patacas.
The volatile VIP segment might be partially behind an anticipated bounce, but visitor arrivals more commonly associated with the mass segment are also on the rise. An Inside Asian Gaming report showed that visitor arrivals in the 30-day period following the resumption of casino activity on February 20 had climbed to 250,000 in a marked improvement over the 156,000 arrivals seen in the calendar month of February.
Having been introduced in the final third of the month, the new border restrictions adopted by Macau, Hong Kong and Guangdong Province may have a minimal effect on March revenue. Some mainland gamblers were still spotted inside three peninsula-based casino properties visited by the Times days after the Guangdong quarantine measure took effect.
However, the restrictions threaten to push back a resumption of mainland China’s Individual Visit Scheme that analysts had pegged for as early as late April. The scheme allows mainland Chinese to apply for a single-use travel permit to visit Macau or Hong Kong without the need to join a tour group.
With group tours suspended and the Individual Visit Scheme cancelled since January, mainland residents can visit Macau only if they have unexpired travel permits issued prior to the cancellation or by using other visas, such as those for business purposes.
Tourists from the greater China region made up the bulk of Macau visitation last year, accounting for over 92% of the 39.4 million visitors. Mainland visitors alone typically account for about two-thirds of monthly arrivals, with about half of those hailing from southern Guangdong Province and about 40% from the nine mainland cities of the Greater Bay Area.

Junkets call for visa resumption

Gaming promoter Kwok Chi Chung hopes that mainland China will return to issuing travel permits for mainland residents so that they may come to Macau. Kwok, who is the president of the Macau Association of Gaming and Entertainment Promoters, hopes that the mainland government will resume issuing visa permits to Macau for mainland residents from non-high-prevalence regions that are less affected by Covid-19. Earlier in January, mainland China suspended the granting of permits to visit the SARs. Recently, Guangdong province also issued new entry policies that restrict people from moving freely between mainland and Macau. Kwok said that Macau’s casino VIP rooms are receiving nearly no income due to Covid-19 and that the uncertainty regarding the situation may lead to the closure of VIP rooms.