ShareThe casino industry in Macau is under immense pressure after posting its worst results in history. A pathetic $49 million flowed into the coffers in July marking the lowest figures seen since public records began in 2009.
Zero-Covid No Help
China’s zero-Covid policy is the reason for this downturn, with casinos only allowed to open on July 23 following a few weeks of total shutdown. It is now possible for tourists to return to the city but the heavy restrictions make it an unpalatable journey for the majority leaving only the most ardent gamblers willing to travel.Last month’s report was 98% down on the July, 2019 figure and the year-to-date income is 20% down.
Galaxy Entertainment, which operates the sprawling Galaxy Macau casino resort, had already lost $108 million during the first two quarters of 2022, similar to the amount of profit from the same period in 2021.
Bleak Future
Even without the restrictive zero-Covid policy, Macau is under the cosh when looking at the future. Crackdowns on lucrative VIP gamblers from Mainland China have forced casinos to pivot towards the mass-market and foreigners.Macau was once the world’s leading gambling destination bringing in an incredible $45bn in revenue in 2013 with predictions for the future reaching $77bn. Compare that with the approximate figure of $12bn in Nevada. Now, who knows where the bottom is in all of this mess.
The situation will almost certainly deteriorate following the upcoming renewal of gaming license tenders. Some months ago, we learned that there would be increased complexity that included a Chinese government official overlooking day-to-day operations in the casinos.
Firms must submit their bids no later than September 14 with a deposit of $1.25 million and lay out their proposals for non-gaming plans such as:
“...the nature, content, amount, location and space, initial and annual investment and implementation plans, estimated economic benefit (especially the proportion of revenue from non-gaming projects in relation to the general income), and the estimate of the extension of the stay in Macau of tourists, regarding the investments of each item, explaining them in a quantifiable way for each year”.
Plans to clampdown on money laundering and corruption must also be a part of this process.
