Macau, the world’s most lucrative casino hub, isn’t taking any more chances when it comes to containing the spread of the deadly novel coronavirus.
Having already restricted travel and cancelled public events since late late month, the chief executive of the Chinese casino enclave on Tuesday announced he would shut down the Special Administrative Region’s economic powerhouses: the 41 casinos that contribute over 50% of the island’s GDP for at least 15 days, starting at midnight.
“Of course this was a difficult decision, but we must do it, for the health of Macau’s residents—this is our only goal,” chief executive Ho Iat Seng said during a press conference on Tuesday morning.
The decision was confirmed during a second press conference held by Macau Finance Secretary Lei Wai Nong in the afternoon, who said the hotels, shops and restaurants at the casino resorts would remain open because they had “sufficient risk control measures.”
Macau’s casinos have only been forced to close once before, for a period of 33 hours when a typhoon struck the island in 2018. The brief closure cost Macau’s six casino operators an estimated $184 million in revenue, but Ho says that Macau can “still bear these economic losses right now.”
Money down
As the world’s most densely populated region, where over 620,000 people are crammed into a space 26 times smaller than Singapore, Macau’s risk of contagion is extraordinarily high. So far, the Wuhan virus has infected 10 people on the island, but the city began enacting quarantine measures during Chinese New Year—ordinarily the gaming industry’s busiest time.
“Chinese New Year is usually the biggest week in the whole year for casinos in terms of financial contribution to their bottom lines,” said Ben Lee, managing partner at Macau-based gaming consultancy IGamix. “The other golden week holidays—like National Day and Labor Day—are good too, but Chinese New Year is when people really throw caution to the wind and go out to test their luck.”
In 2019, Chinese New Year was in early February. Casino gaming revenue for that month hit $3.17 billion. This year, the holiday fell in January and gaming revenue for the month was $2.76 billion—11.3% down on the year before, with tours from mainland China during the actual four-day holiday falling 75.1%.
The Lunar New Year often provides a long tail of earnings too, Lee said, as junket operators host dinners and other festivities for high stakes rollers in the weeks following the official holiday. This year, however, that long tail was severed by the Macau government, which ordered cinemas and theaters to close in January and prohibited large gatherings, such as banquets, to contain the spread of the flu. Yet the casinos, Macau’s undisputed economic engine, remained open.
“We’re not going to see the revenue from junket dinners, where up to 8,000 VIPs would come to Macau for three to four days and gamble,” Lee said, adding that the ban on gatherings has forced iGamix to downgrade its projection for casino earnings in the month ahead. Already the consultancy was anticipating a revenue decline over the year before of 35% due to the viral outbreak. That contraction could now expand to over 60%, owing to the government response.
Safe bet
The coffers of the Macau government, which implements a 40% tax on casino revenues, will no doubt take a hit during the next two weeks. However, since the government typically runs a massive surplus—roughly 50% of earnings, Lee said—the impact of the short closure won’t be so pronounced and the move will likely earn Ho’s administration additional kudos from the public.
“Shutting the casinos is a great idea,” said a sales agent at a shop in the Venetian Macau resort, owned by Las Vegas Sands. She asked to be identified only by her last name of Vong. She and her colleagues had crowded around an iPad to livestream the chief executive’s press conference on Tuesday. “It’s a little bit dangerous being outside, and there was already one case discovered inside a casino,” she said.
Rumors that several of Macau’s coronavirus patients had stayed at casino resorts in the city began late last month and, speaking during Tuesday’s press conference, chief executive Ho confirmed at least one case of coronavirus that had been contracted by staff at the Galaxy Macau resort—possibly the city’s first example of human-to-human transmission.
Aside from keeping the casinos open, the Macanese government has acted swiftly to restrict contagion since the city’s first case of coronavirus was confirmed on January 22. The authorities procured 20 million surgical masks and fixed a quota and a price for their sale. Bus drivers on the island are now entitled to deny service to passengers not wearing masks.
The staff at the Venetian—like everyone else in Macau—have their faces swaddled in surgical masks. Guests are required to follow suit in order to access the casino at the heart of the integrated resort, where access is restricted to those who pass a series of temperature checks: one at the entrance to the hotel and a secondary screening on the outskirts of the cavernous casino hall.
A sign at the gateway warns gamblers that failing to disclose any recent visits to China’s Hubei province—which is ground zero for the current epidemic—could result in a two-year prison sentence, as decreed by the government. Said Vong: “I think if we compare the government of Hong Kong to the government of Macau, ours is handling this better.”
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