Macau casino revenue has plunged amid the ongoing impact of the pandemic on the gaming destination. Revenue for May fell 68% from a year earlier, and the world’s biggest gambling hub continues to suffer from a tourist drought related to China’s stricter Covid-related travel restrictions, which are taking a heavy toll on the economy, causing businesses to close down and pushing unemployment to its highest level since 2009.
According to official data from the Gaming Inspection and Coordination Bureau, gross gaming revenue dropped to 3.3 billion patacas ($400 million), and while up 25% from April, it is 87% below the 26 billion patacas ($3.2 billion) reported in pre-pandemic May 2019, as reported by Reuters.
In this critical scenario, Macau Government showed signs of willingness to support the industry, as it proposed revisions to the gaming bill currently being scrutinized by the Macau Legislative Assembly, including a potential tax cut of as much as 5% on casinos’ gaming revenue, if they are able to bring in players from outside of China. However, on Monday, the Secretary for Economy and Finance, Lei Wai Nong, said that closed satellite casinos will not be permitted to reopen, despite the government’s recent U-turn in a legislative amendment that would allow gambling concessionaires to rent casino spaces from non-licensees.
Macau is the only place in the country where it is legal to gamble in casinos. Heavily reliant on casino taxes, which account for more than 80% of government revenue, Macau has had little success in diversifying its economy. "We are the most reliant city in the world on tourism. Of course, we didn't have any other industries to fall back on," said Glenn McCartney, an associate professor at the University of Macau.
More than 90% of visitors to Macau reportedly come from mainland China, which continues to pursue a "zero-COVID" policy. With visitation rates in the first quarter dropping more than 80% compared with the same period in 2019, Macau's six casino operators are facing daily revenue losses and accumulating debt as liquidity continues to dry up.
Furthermore, The Emperor Entertainment Hotel said in April it would close its casino from June 26, while at least seven other casinos are due to stop operations by mid-year, as reported by local media. Additionally, the Macau Economic Association said the local business climate index will remain "poor" for the coming three months.
The International Monetary Fund (IMF) warned in an April report that it would take several years for Macau's economy to return to its pre-pandemic level.
China's moves to stem capital outflows and crack down on the opaque junket industry that is tasked with bringing in high-rollers from the mainland have also hampered gambling revenue.
The unemployment rate for local residents has risen to 4.5%, according to the latest government figures, up from 1.8% in 2019. Macau's government has urged casinos, which employ tens of thousands of local people, not to fire workers. Instead, some operators have chosen not to renew contracts, or offered unpaid leave or share bonuses instead of giving full salaries.
Cloee Chan, a labour group activist in Macau, said the lack of gamblers, coupled with the closure of VIP parlours and some casinos, posed a major challenge to the local labour market. "Many workers in the gaming industry are now either under-represented or fired," she said.