Macau casinos see worst month of year as city's future debated

MACAU (BLOOMBERG) – Macau casinos had their worst month of the year as the world’s largest gambling hub reported a 40 per cent fall in gaming revenue for last month, after a pandemic-induced travel halt and as uncertainties swirled over tighter government oversight of the industry.

Gross gaming revenue declined to 4.37 billion patacas (S$730 million), the lowest monthly number this year, according to the Gaming Inspection and Coordination Bureau. That was still better than the median analyst estimate for a 42 per cent year-on-year fall.

Revenue fell 26 per cent from the previous month and was down 83 per cent from the pre-pandemic level in 2019.

Macau casinos’ recovery was thwarted last month by tougher travel restrictions imposed by China – the city’s biggest source of tourists – after rare Covid-19 flare-ups in Macau. A quarantine requirement for people entering the mainland from Macau was not lifted until Oct 19 – and encompassed the seven-day national Golden Week holiday that started on Oct 1, traditionally a peak travel season.

Macau recorded just 8,159 visitor arrivals during Golden Week, down 95 per cent year on year, according to government data. While tourists started to return after travel restrictions eased, a Covid-19 resurgence in mainland China later in the month has now led the enclave to require quarantine for visitors traveling from 20 regions in nine mainland provinces, and added uncertainty to the tourism outlook.

Hong Kong, the second largest contributor of visitors, announced it will resume a quarantine exemption for arrivals from Macau from Nov 2. Still, Macau maintains its quarantine requirement for people traveling from Hong Kong, making the future impact on tourism to the gaming hub unclear.

The biggest questions facing Macau still revolve around a September government proposal to review its gaming law, which has triggered fear that casinos – including their operations and profit distribution – will be more tightly controlled by the authorities. A 45-day consultation period, during which the industry and public were able to submit suggestions to officials on how to revise the rules, ended on Friday. The government will finalise its plan after considering the suggestions, though no timeframe has been given.

During the consultation, officials maintained that a plan to send government representatives to directly monitor casino operators would not affect business operations. Other proposals to increase local ownership in the companies and approve dividend payout are meant to ensure operators focus on investment in Macau and use their profits to help the city diversify its economy, JP Morgan analysts led by Mr D. S. Kim said in a note on Oct 26. That suggests the government could be softening its tone to alleviate public concerns, Mr Kim said.

The Bloomberg Intelligence index of Macau’s six casino operators gained 10 per cent last month, compared with the benchmark Hang Seng Index, which was up 3 per cent.

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