Gaming | Analysts warned new mainland outbreak may affect November revenues

Gaming analysts have expressed optimism for a recovery in gaming revenue this month, although the new outbreak of Covid-19 cases across mainland China is restraining the optimism of the predictions. The forecasts come following an October in which the city recorded its third lowest gross gaming revenue (GGR) since the pandemic began: a decline caused by a string of Delta cases which brought travel to a halt.
Data from the Gaming Inspection and Coordination Bureau last month showed that casino revenues fell as much as 40% to MOP4.37 billion, the lowest figure this year.
Typically, October is the month which records the highest gaming revenues in the city, mainly due to the seven-day Golden Week holiday.
However, due to Covid-19 restrictions, the city recorded the lowest-ever Golden Week arrivals figure at just 8,159 visitors during the National Holiday: a plunge of 95% year-on-year and a severe blow to the city.
Meanwhile, analysts forecast a jump in this month’s casino revenues.
Morgan Stanley’s Praveen Choudhary and Gareth Leung forecast that the November GGR will increase 57% over October’s figure to MOP6.9 billion.
However, the analysts expressed concern that the “recent Covid spike in the mainland could pose risks if cases spread into Guangdong.”
China’s new locally transmitted Covid-19 cases spiked to a near three-month high. Yesterday, the National Health Commission confirmed 93 new local symptomatic cases from November 2, up from 54 the day before.
The figure is the highest daily count since August 9, which was at the peak of China’s last major outbreak.
Brokerage Bernstein analysts Vitaly Umansky, Louis Li and Kelsey Zhu are tipping that GGR for November this year will be more than 60% down from November 2019.
This analysis suggests revenue of between MOP7 billion and MOP8 billion.
“However, due to the new wave of Covid outbreaks in China, Macau has now imposed quarantine requirements on 21 cities/districts [in] 10 Chinese provinces,” the analysts said.
“Six new cities/districts were added over the past week – something to watch,” they added.
Meanwhile, JP Morgan’s DS Kim, Amanda Cheng and Livy Lyu advise staying cautious about the sector into 2022, expecting no easing of border policies until after the Beijing Winter Olympics from February 4 to 20.
With just two months left before the year ends, it is now certainly impossible for the city to meet its goal of gambling revenues of MOP130 billion for 2021.
The accumulated revenue in the first 10 months of this year reached MOP72.152 billion.

Gaming law drafted in ‘undetailed manner’

359 individuals and organizations participated in the public consultation on the revision to gaming laws which ended last week. During the consultation, local officials advised that a plan to send government representatives to directly monitor casino operators will not affect business operations. One of the significant changes in the consultation document is the abolition of the statutory limit on gaming sub-concessions. Macau-based lawyers João Nuno Riquito and Belmiro Leong from Riquito Advogados recently stated that “most of the items of the revision are set forth in a very general undetailed manner,” as cited in the International Financial Law Review website.
Another proposed change to the law is the restriction on dividends to shareholders of concessionaires without prior government approval.