How Covid-19 Impacts Macau’s Revenues

Image by Macau Photo Agency
Article by : Helen Nov 25, 2020

Loads of unexpected things have taken place in 2020, and a significant part of them wasn’t pleasant, to put it mildly. It is a year when we have changed the way we live, work, and relax, and the reason for it is a previously unknown virus called COVID-19. Its impact can be seen especially on economies, and the gaming market is not an exception. The casino operators have suffered greatly due to global lockdown and casino shut-downs.

A “good” example of the virus impact is reflected in the Macau gaming industry, and the latest data is proof of this. Beginning in early 2020, Macau has received one-fourth of the tax revenues compared to the same period of 2019. As there are only two months left in the current year, Macau has no chance of getting the same revenues as in the last year. In 2019 the gross revenue from the gaming industry in Macau generated around $36.7 billion. The first 10 months of this year have brought $5.73 billion, so a year-on-year decline is 81.4%. The Macau Service Bureau has reported that gaming taxes for 10 months of 2020 are around $3.05 billion, while in 2019 it was 74% higher. However, in October, the SAR Government collected $117.1 million, meaning it is 54.8% more than in September 2020.

Under normal circumstances, the casino industry significantly supports the Macau Government, but given conditions related to the coronavirus pandemic, it doesn’t have sufficient force to pay enough gaming taxes. In 2019 the city’s overall revenue was 66.5% more than in 2020 when it stands at $4.51 billion. According to the previous estimates, the city expected to get $13.71 billion of overall and capital revenue together. However, Macau managed to receive $10.1 billion: 27% less of the forecast amount.

Anyway, there were some positive changes in October, and it was one of the best months for the Macau gaming industry since Covid-19 had appeared. As Mainland China has recently eased visitation rules to Macau, the visitor arrival rate has increased. Since January, Macau’s gaming regulator has been facing a month-on-month drop, but in October the gaming revenue increased to $914 million. Though there is a decline of 72.5% compared to the same period of 2019, October has shown that Macau has pretty nice chances for proximate recovery. Not to mention that in 2019 a surplus was $6.01 billion, and despite all the issues in 2019, the government has recorded a $1.4 billion surplus. Analysts said that lifting of travel restrictions and simplification of the visa-issuance process would lead to market restoration.

Toward the end of October, the number of visitors increased. But it’s still far away from our normal level.

Joe Liu, director of Macau Pass

Thanks to the annual Golden Week, the city has received higher revenues in October. The slower increase of gaming revenues is a good sign for the Macau gambling industry, but it doesn’t mean difficulties are all behind it. There will come a time to make amends, and for this reason, lawmakers are trying to take around $2.5 billion from Macau’s reserves. They think it can offset the effects of Covid-19 and balance the budget. Moreover, the 2021 budget has been recently approved, and it could lead to a $3.3 billion withdrawal from the city’s reserves.

Helen

Chief Editor

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