Macau casinos ordered to shut down for the first time in two years amid Covid-19 outbreak

As Macau faces its worst coronavirus outbreak yet, the government has shut all its casinos for the first time in two years. As of Monday, casinos and other businesses have been ordered to close down for at least one week, until July 18, with people ordered to stay at home. Furthermore, the government added that the police would monitor the flow of people, and those that disobey would be severely punished.

When the city’s lockdown began, some three weeks ago, casinos had been allowed to remain open but with staff reduced by 90%. With the latest lockdown measure, analysts predict that any recovery in gaming revenue would most likely not happen until the end of the third quarter or during the fourth quarter.

"We would probably need to write off July and likely August as well from the models," said DS Kim, an analyst at J.P. Morgan, as reported by Reuters.

The announcement comes after Macau authorities had assigned two hotels in casino resorts to be used as medical facilities: the east wing of SJM Holding’s Grand Lisboa Palace; and the Grand Hyatt hotel, owned by Melco Resorts. The two hotels joined Sands China’s Sheraton hotel and The Londoner resort, which had already been used as quarantine facilities.

Since mid-June, Macau has reported 1,500 cases, and the authorities have informed that more than 19,000 people are in quarantine, as Macau adheres to China's "zero-COVID" policy that aims to curb all outbreaks. 

More than 30 zones in the city that have been deemed high risk are now under lockdown, meaning no one is allowed to enter or exit for at least 5 days, and people are to stay home although short trips for essential services have been allowed. Although the government has not imposed a strict lockdown as those seen in mainland China, the strict measures mean Macau is effectively closed.

Up to this point, the government had been hesitant to close casinos due to its mandate to protect jobs, as the gaming industry accounts for more than 80% of government revenue with most people employed directly or indirectly by the casino resorts. The last time casinos in Macau were ordered to shut down was in 2020 for 15 days.

Frustration grows in the city, as some residents report having had to queue for more than 20 hours to access healthcare facilities, and many are desperate to go back to work.

Residents will be required to take part in mass COVID-19 tests four times this week. They have been tested six times since mid-June and are expected to do rapid antigen tests daily. More than 90% of Macau's 600,000 residents are fully vaccinated against COVID-19 but this is the first time the city has had to grapple with the fast-spreading Omicron variant.

Following the lockdown, shares in Sands China plunged 9%, while shares in Melco International, Wynn Macau, SJM, Galaxy, and MGM China dropped between 6% and 7%.