Closure to cost casinos up to €1.3b in lost revenue

Two week casino closure set to badly impact operators already suffering from a decrease in visitors during Chinese New Year.

Macau.- According to analysts consulted by Macau News Agency (MNA), the shut down of all casinos in the SAR could lead to gaming revenue losses between €848 million and €1.3 billion.

“After the outbreak of the coronavirus epidemic and the related policies undertaken by various governments in controlling visitor flow, it has been estimated by many investment firms that Macau’s February gross gaming revenues may fall from around MOP800 million (€90 million) a day as normal to around MOP500 million (€56 million)”, University of Macau Associate Professor in Business Economics, Ricardo Siu, told MNA.

“Given that the epidemic situation continues in February, I may suspect that the daily GGR may only be around MOP400-500 million, or even lower.  In other words, the ‘real effect’ of the 15-day casino suspension decision by itself may lead to a lower of around MOP6-7.5 billion in GGR”, he added.

The Director of Corporate Finance at Fitch Ratings, Colin Mansfield, said to the news agency that since visitation was already down by about 80 percent through the Chinese New Year holiday, the impact from fully shutting down the casinos is “on the margin”.

“Prior to the outbreak, Macau was generating roughly US$100 million in daily gross gaming revenues, so a 15-day closure implies US$1.5 billion of lost market-wide gross gaming revenues,” Mr. Mansfield said.

“Our hypothetical stress case was a 50 percent and 25 percent decline in revenues in the first quarter and second quarter, respectively, in Macau. This resulted in an aggregate US$3.3 billion cash flow decline for all six Macau operators.”

Gaming revenue growth in Macau in 2020 was also expected to be negative, with Fitch Solutions having just announced they had revised their economic growth predictions for Macau to a 3.8 per cent drop this year.

Last week, Secretary for Economy and Finance, Lei Wai Nong, announced several measures to mitigate the economic impact of the virus outbreak, with annual individual cash handouts to be provided earlier while rents paid to the Macau government will be wavered for three months starting from February 1.