Gaming sector suffers from outbreak aftermath as slumps continue in August

Macau’s gross gaming revenue fell to MOP2.19 billion in August, a plunge of 50.7% year-on-year, as the city struggles with the aftermath of its largest outbreak yet that led to a new low in revenues in July.

Data from the Gaming Inspection and Coordination Bureau (DICJ) shows a continuous decline since March due to outbreaks in the mainland, leading to lockdowns and strict border restrictions.

August’s revenues are worse than the median analyst estimates of a 47.5% year-on-year decline, yet represent a surge of over five times from July, albeit from a low base of MOP398 million – the lowest in decades.

The casino sector suffered its worst month in July as gaming revenues tumbled 95% year-on-year in July due to the largest flare-up in Covid-19 cases the city has ever recorded from mid-June.

Although tourists are slowly returning to the city, with Macau even recording its highest daily arrivals on Saturday following the easing of restrictions on August 3, Bloomberg Intelligence analyst Angela Hanlee said in a note that visitor arrivals to Macau in the third quarter may return to only 10% of the pre-pandemic levels, implying that recovery will remain weak through September.

Casino operators have been bleeding millions of dollars every day amid the upcoming bids to renew their operating licenses.

The crackdown on junkets, which bring high-rollers to the city’s casino floors, are expected to further hammer the already depressed sector, as well as the fact that gaming licenses are set to expire in December 31.

In the city’s biggest gaming overhaul, the minimum annual gaming revenue generated by each gaming table should be MOP7 million.

The minimum cap for the annual gaming revenue generated by each gaming machine is set at MOP300,000.

According to the law, if concessionaires fail to meet minimum revenue requirements, a “special premium” will have to be paid to the government to make up the difference between the actual and minimum amount.

Casino operators are seeking a bid to continue to operate in the region for the next 10 years, which they will submit to the government by September 14

Stocks rise only to plunge again

Casino shares rose following the announcement of the reopening of the borders to 41 foreign passport holders. Leading the rise on August 31 was Melco Resorts & Entertainment limited with 3.71% in the early trading, while Las Vegas Sands rose 3.71%. Wynn Resorts, MGM also rose 1.55% and 0.55% respectively, while Galaxy and SJM Holdings rose marginally to 1%.

However, shares retreated yesterday after the announcement of gaming revenues. Melco slid 4.63%, followed by Sands and MGM with negative 3.06% and 2.95%, respectively.

Galaxy also tumbled 2.49%, while SJM and Wynn slid 1.82% and 1.67%, respectively.