Macau lower-stakes revenue may be slow to recover

Analysts at Morgan Stanley warn lower-stakes mass market turnover may not recover fully once travel bans and restrictions are lifted.

Macau.- As casinos in Asia continue to reopen after restrictions imposed by the Covid-19 pandemic, casinos and business moguls in Macau are asking if the worst is over and turnovers will now recover to pre-lockdown levels.

Financial analysts at Morgan Stanley have issued a memo warning that might not be the case. They say that revenue from the so-called “grind mass” lower stakes segment of the market may not recover fully once travel bans and restrictions are lifted due to the influence of social distancing measures.

Some operators may continue to open doors only to VIPs, restricting tables to three gamblers at a time, running slot areas at only 50 per cent capacity, among other adjustments. In this context, even though more barriers are lifted, it will be difficult for revenue in the mass segment to make a strong recuperation.

The Morgan Stanley report stresses that the issue could have a particularly larger impact on Sands China, the largest operator in the SAR, which it said was more exposed.

Referring to the lower stakes segment, the analysts said: “Our analysis suggests more downside for Sands China (with highest exposure to grind mass)” when business returns in greater volume.

“While the industry could see 19 per cent lower mass revenue in 2021 (versus 2019), Sands China could see that down 24 per cent due to its highest exposure to grind mass.”