Macau casino earnings drop to all-time low for July
Macau casinos just suffered their lowest monthly gross gaming revenue ever, with this year’s July earnings totaling MOP398 million (US$49m). The income went down by 95.3% compared to their July 2021 revenue of MOP8.44 billion, and significantly less than their MOP24.45 billion revenue in 2019, before the COVID-19 pandemic took over. The amount is also the lowest since Macau started welcoming additional casino operators and expanding its market in 2003.
The monthly gross gaming revenue (GGR) is the lowest amount the six gaming operators have experienced since the onset of the pandemic. Despite that, the amount is slightly higher than the consensus assumption that the drop would sink to 98%. The last time Macau experienced a similar low GGR was in June 2020, when the casino industry grossed MOP716 million.
The GGR for July was also an 86% drop from the June income of MOP2.4 billion this year. This was before the casinos in Macau were mandated to shut down. The recent decline was primarily due to the COVID-19 restrictions that shut down the gaming venues in the region for 12 days, from July 11 to July 22. The casinos, as well as other commercial and industrial businesses, did not resume activities until July 23.
The casinos were shut down due to the new COVID-19 cases that began in mid-June, which the local government had a hard time containing. Besides the gaming establishments, the public lost out on millions of dollars because the workers were not paid during the time the casinos were closed.
John DeCree, a CBRE Equity Research senior gaming analyst, said, “The results are unsurprising. Casinos were closed … and much of the rest of the SAR was closed before and after that. More importantly, broader travel restrictions have been in place since late June.”
Despite it all, August is looking better for the gaming sector. COVID-19 restrictions were reduced on August 2 in Macau. The social distancing rules, which had a tight hold on businesses in July, were relaxed after the authorities managed to stop the spread of the virus. Venues like gyms, bars, and restaurants are allowed to operate now. However, to enter the venues, the customers have to produce a negative acid test result. Analysts also warned that traffic in casinos would not be much in August; however, the easing of the zero-tolerance COVID policy could ease things up in the fall.
The quarantine-free border crossing with the mainland is currently closed, and there is no information concerning when it will reopen. At the moment, visitors from the mainland or even nearby Zhuhai have to produce a negative COVID-19 test before getting into Macau. They were also expected to isolate themselves when they returned for at least seven days.
The conditions of travel are stopping travelers from going to Macau and halting one of the city’s most significant sources of revenue. The downturn led Macau to lose its title to Las Vegas as the top gambling location.
The Macau Government Tourism Office has not yet released the number of people to come in July; however, the visitor count in June was around 380,671 visitors, while June 2019 saw over 3 million visitors. At the moment, there is no schedule concerning when quarantine-free traveling policies will be implemented; hence DeCree revealed that he does not expect much difference in the gaming income for August.
New public tender process for Macau casino licenses
The announcement of the low record month was made after Ho Lat-Seng, the Macau chief executive, mentioned that the public tender process, which was linked to the licenses of the six casinos, would begin soon. The casinos include Sands, Melco, MGM, Galaxy, SJM, and Wynn, and the process will stretch from July 29 to September 14.
The new tenders would last for ten years, from 2022 to 2032. The newly formed committee in the region will oversee the process, the Committee for Public Tendering of Concessions for the Operation of Casino Games of Fortune. The committee comprises nine members and will field the applications for license renewal of the casinos.
The public tender originated from a Macau gaming law reform approved in May. It took the place of the former system that involved three concessionaires and three subconcessionaires, along with a simplified six-concession model. All six concession holders are expected to be granted new tenders.