Posted on: January 1, 2021, 01:06h.
Last updated on: January 1, 2021, 01:06h.
Macau casinos just wrapped up their worst year since 2006, the six commercial gaming operators collectively winning 60.4 billion patacas ($7.53 billion).
2020’s gross gaming revenue (GGR) finished down 79.3 percent from 2019 when casinos in the Chinese Special Administrative Region won $36.6 billion. COVID-19 resulted in Macau tightening — and even closing — its borders at times throughout the year.
The enclave hasn’t reported a new COVID-19 case in more than six months, but travel in and out of Macau remains difficult due to the current time-consuming process of obtaining an Individual Visit Scheme (IVS) travel permit.
A new variant strain of COVID-19 that recently emerged in the UK, and now detected in Japan, has once again squeezed Macau’s entry protocols. Anyone arriving from mainland China who has been in any other country within the past three weeks is prohibited from entering.
Prior to 2020, Macau casinos hadn’t won fewer than $10 billion in a year since 2006, which was only four years after the region ended SJM Holdings’ decades-long monopoly on gaming and welcomed in five additional operators.
2020 was the most unthinkable year, and with international and domestic travel grounded, and world economies on brink, Macau casinos saw their gaming revenue drop by more than $29 billion.
December, however, was the market’s best month of what was a disastrous 2020. GGR totaled 7.82 billion patacas ($979 million). That easily passed 2020’s second-best month, which came in October when the gaming floors won $910 million.
December 2020 was nonetheless still a 66 percent year-over-year decline.
When will Macau casinos return to their pre-pandemic gaming revenues? Sanford C. Bernstein gaming analyst Vitaly Umansky believes the industry will return to roughly 80 percent of its 2019 levels in 2021.
Because of easy comparables, Umansky adds that Macau gaming revenue will show solid gains in the 12 months ahead.
Assuming the new COVID-19 strain doesn’t result in lockdowns, and can be defeated with the current coronavirus vaccines, gaming analysts say a pent-up demand to travel and gamble will be the catalyst for recovery.
A Morgan Stanley note explained that the resumption of self-serve IVS permit kiosks will allow for more expedited travel between the mainland and Macau.
Macau’s six gaming concession holders — Sands, MGM, Wynn, Melco, Galaxy, and SJM — are set to see their operating permits expire in June of 2022. The local government is expected to issue new tenders to the six companies, but under more stringent regulations, including better monitoring of capital flow from the mainland into the casino hub.
But Macau will also want to make sure the market remains attractive to high rollers throughout Asia. The enclave’s economic prosperity is dependent on its gaming industry, which won a record $45 billion in 2013.
That all-time best was followed with three consecutive years of decline, as China President Xi Jinping ordered law enforcement to better scrutinize VIP junket groups.