Macau’s casino operators are betting on a slow recovery from COVID-19

Lucrative severance packages offered by several casinos and junket operators in China’s gambling enclave of Macau suggest the city’s high rollers expect the downturn caused by the COVID-19 pandemic will last well into next year.

In April, Galaxy Entertainment offered casino floor staff a one-time payment of $47,500—about a year’s salary—if they volunteered to quit. In May, Melco Resorts incentivized staff to take voluntary redundancy by offering 12 months’ pay and, in June, junket operator Suncity Group approved voluntary redundancy packages equal to 15 months’ pay.

“Casinos aren’t going to offer that outlay if they expect things to return to normal within a couple years,” says Ben Lee, managing partner at Macau-based gaming consultancy IGamix, as the casino city’s recent Delta outbreak shatters hopes that the island’s borders might reopen soon.

Closed up

The Macao Special Administrative Region (SAR) has recorded just 63 COVID-19 cases since the pandemic began—a baseline officials achieved by maintaining one of the world’s strictest border closures.

Travelers only from Hong Kong, mainland China, and Taiwan can enter the gambling enclave on China’s south coast, and only if they present a negative COVID test. Even then, visitors from Hong Kong, Taiwan, and several provinces in mainland China currently battling Delta outbreaks must endure a two-week quarantine upon arrival in Macau.

While the strict border closure has spared Macau the worst of COVID-19, the island’s reduced tourism has pummeled the SAR’s casino-driven economy. Revenues across the city’s 41 gambling dens dropped 79% in 2020 to $7.57 billion, despite lockdown restrictions shuttering casinos for only two weeks in February 2020. Macau’s GDP, roughly half of which comes from taxes on gaming revenues, declined 56% to $24 billion last year.

With few other places to go and with Macau’s luxury hotels offering rock-bottom room rates, visitors are returning to the tiny former Portuguese colony. In December last year, Macau authorities even issued over $36 million of spending vouchers to mainland Chinese tourists, in a bid to lure more visitors to the island.

But according to Bloomberg, Macau’s tourism numbers remain at less than 10% of their heights in 2019. Hopes that numbers would steadily increase were dashed in early August when Macau reported its first COVID-19 case in over a year, forcing the city into a two-week lockdown.

Shut down

On Aug. 3, four family members returning from mainland China tested positive for the Delta variant of the coronavirus. Authorities, fearing the contagious variant would spread easily in the dense city, where only 43% of the population is vaccinated, slammed Macau’s entertainment venues shut and ordered all roughly 700,000 of the city’s residents tested for COVID-19.

The mass testing was complete within three days. Zero new cases were found, and entertainment venues—bars, cinemas, gyms, and clubs—will begin reopening on Wednesday. Casinos, the lifeblood of the city, were allowed to remain open throughout the lockdown.

“The government does not have plans to close casinos because the problem did not happen there,” Macau chief executive Ho Iat-seng said when enacting the lockdown. In 2020, gambling halls were forced to close for only two weeks after a casino worker tested positive for COVID-19.

Macau’s casinos lost an estimated $937 million in revenue during those two weeks—only the second time in history that the government has forced casinos to close. Gambling losses piled higher as global travel shut down completely in 2020.

Macau’s casino floors are beginning to recover but remain far below pre-pandemic levels. The city’s Gaming Inspection and Coordination Bureau reported gross gaming revenue (GGR) surged 528% year on year in July, to $1.05 billion. That’s 29.2% higher than GGR in June, but still 65.5% less than casinos earned in June 2019.


Only six companies—SJM, Melco, Galaxy Entertainment, Wynn Macau, Sands China, and MGM China—are licensed to run casinos in Macau. Each purchased a “concession,” auctioned by the government, permitting them to open gaming rooms. All six concessions expire in June 2022.

In the before times, operating a casino in Macau was a lucrative gig. The city’s high-roller tables turn over three times the revenue of the entire Las Vegas Strip and account for the majority of global earnings for their operators. But with the pandemic slashing take at Macau’s tables, the value of a Macau concession has become harder to gauge.

“If the government holds the concession tender process on schedule, would they be able to attract the best new candidates?” Lee says. Macau authorities are seeking to diversify the local economy away from gambling and increasingly require casino operators to invest in alternative entertainment facilities, which provide lower rates of return.

Most resort operators are reluctant to spend money on low-value entertainment facilities under normal circumstances, let alone when their books are stressed by a pandemic-era depression. Several casino operators expect the government will extend the expiry date for a year or more beyond June 2022.

“I don’t think the government is in a rush to renew the licenses because they want to do things right,” Sands China CEO Wilfred Wong said during the group’s Q2 investor call in July. Other analysts agree a decision likely won’t be made until after the city’s legislative elections conclude in September.

Current concession holders might have to endure empty casino halls a while longer.

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