Macau Casinos’ January Revenues Are in Line with the Slow Rebound Expectations
January financial performance stats are in for Macau’s gambling industry, and there is one thing for sure: it continues its slow rebound to the pre-pandemic levels. In the first month of 2021, the Macanese casinos brought in MOP8.024 billion (roughly $1 billion), which is 2.6% more than they generated in December 2020 (MOP7.82 billion, or approximately $979 million) – and it was the highest-grossing month for the industry since January 2020. Still, the year-on-year change in revenues is painful to look at: this year’s January revenues were down 63.7% compared to the first month of 2020.
As the casino industry remains at 32% of the pre-pandemic levels, we are yet to see when the Morgan Stanley analysts’ predictions of recovery to 65% of the 2019 revenues will begin to come true. The Macanese authorities are not that optimistic – they expect the industry to bounce back only to 44.5% of the 2019 gross gaming revenue in 2021.
As for Bernstein analysts’ outlook, Vitaly Umansky and Tianjiao Yu commented on the casino industry performance in January, saying, “On a relative basis, the premium mass was the best-performing segment during the month, while junket VIP was most hamstrung and base mass continued to be hampered by low levels of visitors and HK travel closure.”
China has been instituting larger-scale lockdowns and urging a reduction in travel. The travel impediments will lead certainly to reduced visitation (vs. earlier forecasts) into Macau for the next few weeks at least, with Chinese New Year visitation being impacted.
Even though some hoped that the Chinese (Lunar) New Year (celebrated from February 12 to February 26 this year) will boost the Macanese economy with an influx of mainland Chinese tourists, that is not likely to happen. Both the Macanese and mainland Chinese governments are wary of any events that could draw crowds and facilitate the coronavirus spread, especially considering an uptick in new infection cases in mainland China.
China reported over 2,000 new coronavirus cases in January – this is the highest monthly total since March 2020. Macau, on the other hand, Macau is on a 309-day streak of no new COVID-19 cases (as of February 1), and the Macanese government wants to keep it this way. (Throughout the whole pandemic, Macau saw only 47 positive COVID-19 cases, and none of them were fatal.)
To minimize the movement of people, Macau encouraged non-resident workers to stay put and avoid traveling back to their families for the Lunar New Year celebrations. The authorities also canceled the traditional annual celebration parade and firework display, as well as the market. (And keep in mind that Macau still doesn’t let in any foreign tourists.)
Apart from COVID-19’s blow to the tourism industry (which is hardly news anymore), there is another, more pressing issue: China has doubled down in its war against ‘overseas gambling’ with the amendments to the country’s Criminal Law and the expansion of the destination blacklist. The amendments to the Chinese law will enter into force on March 1, 2021. They will essentially outlaw any junket operations that facilitate mainland Chinese nationals to go on trips to jurisdictions where gambling is legal to indulge in playing at casinos.
Sands China President, Wilfred Wong, is wary of the ambiguity of the definition for ‘cross-border gambling’ in the amended legislation. “They specifically say outside of the country, which, as you all appreciate, Hong Kong, Macau, and Taiwan is generally considered within the country. But then they leave ambiguity there by putting the word offshore inside the bracket after outside the country,” Wong noted during a conference call.
As for the overseas gambling destinations blacklist, even though the Chinese government announced the second batch of such destinations is in development, we are still in the dark about which places are currently on the list.
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