Macau casino revenue plunges 68% to new 18-month low in April amid tourism drought

Macau casino revenue has plunged to an 18-month low amid the ongoing impact of the pandemic on the gaming destination. Revenue for April fell 68% from a year earlier as the world’s biggest gambling hub suffers from a tourist drought related to China’s Covid lockdown measures.

According to official data from the Gaming Inspection and Coordination Bureau, gross gaming revenue dropped to nearly 2.68 billion patacas ($331 million), a figure slightly lower than the median analyst estimate of a 66.5% year-on-year decline, says Bloomberg Quint. The new plunge follows March’s 56% drop in gaming revenue.

Additionally, April’s revenue is 27% down when compared to the previous month, and about 89% down from pre-pandemic levels in 2019. China’s strict Covid restrictions -which are in place in Shanghai, Beijing and other key jurisdictions- are seen as the major factor behind a lack of tourism in Macau, which will likely miss gambling revenue from the upcoming five-day Labor Day break at the start of May, traditionally a peak season for the gaming destination.

Macau’s poor performance comes as China struggles with the worst Covid outbreak since the pandemic first started in Wuhan, in late 2019. Although Macau has actually eased some border control restrictions, now requiring quarantine only for visitors from about 30 Chinese cities -down from 80 in March- this has still failed to reactivate travel to the gaming hub.

The easing of some border control restrictions -which also include a requirement to take a Covid test up to three days before entering the city, compared with two days previously- is described by the cited source as a positive signal, given it shows Macau’s intention to start improving visitation.

However, a recovery in the gambling hub is dependent on how China’s outbreaks and lockdown measures develop going forward, says Vitaly Umansky, a Sanford C. Bernstein analyst quoted by Bloomberg. Meaningful easing to travel could potentially begin in late 2022, ramping up through 2023, analysts for JPMorgan Chase & Co. wrote in an April 23 note.

Macau’s Statistics and Census Service is set to release visitation data for April later this month. Meanwhile, March saw a 30% visitation drop from a year earlier to almost 527,000 trips -most from China- and the number of hotel guests was 41.3% down year-on-year.

In late April, the International Monetary Fund (IMF) issued a new report in which it forecasted things might not bode well for the gambling hub in the long term. The IMF stated the economic outlook of the city is clouded by both a high exposure to climate-related shocks and uncertainties over new gambling laws currently being debated at the Legislative Assembly (AL).

The IMF believes the degree and frequency of climate-related disasters, such as cyclones and coastal floods, are expected to increase; and has warned Macau’s economy would benefit from diversification, instead of solely relying on gaming and tourism. According to the report, the gambling sector could reach its pre-pandemic level by 2025.