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Lower GGR Levels In Macau And Traveling From Mainland China

Article by : Helen Nov 19, 2020

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Casino operators around the world have suffered from the Coronavirus pandemic, and Macau isn’t an exception. There have been some outbreaks of COVID-19 in several markets, so the casinos’ prospects for recovery from the lockdown were not pretty high. It was predicted that in order to reach the pre-pandemic levels Macau needs at least a
year or two. Unfortunately, the Macau government assumes that this period can take even longer and doesn’t expect 2021 will provide relief.

Taking into account that in 2020 the GGR (gross gaming revenue) fell by 90% compared to 2019, chances for a quick restoration of the gambling market in Macau city are weak. The casino industry in the city is loosened heavily by the new conditions instigated by Covid-19. Thus it is expected that the GGR received by casinos during a year will be $16.28 billion, meaning it is 45% lower than in 2019.

The Macau government is usually cautious when presenting budget proposals; however, a 45% recovery is far from easy. It has been estimated that the gaming industry’s taxes will be $5.69 million in the following fiscal year. Moreover, the city authorities said that because of a “narrow tax base and increasing expenses but no rise in income,” the budget might face a fiscal deficit. It means that the city is going to be to run at a deficit for the second consecutive year.

We are now seeing a certain increase in gambling revenue, but under the current circumstances, we can’t expect too much other than to strive for stability.

There are some intentions to spice up the city’s tourism industry to attract more tourists from other countries. Leong also added: “I believe that all concessionaires are now thinking about switching their current development methods to strengthen the development of non-gaming elements. Some gaming measures also need to be changed.”

During the last several years, online gaming has been a subject of debate, but this idea hasn’t advanced significantly in practice. However, the idea of online gambling in Macau is getting much popular as far as the city is looking for new ways of getting revenues. Despite the idea has been promoted by lawmakers, this segment requires a lot of changes in order to be authorized.

Since September 23, people from Mainland China have been allowed to apply for a visa. They can travel according to China’s Individual Visit Scheme program or just join a tour group. However, the question of traveling outside of mainland China hasn’t been resolved yet. During the first week of the autumn Golden Week holiday, the visitor rate has decreased by 85.7% compared with the previous year.

Earlier, there were no problems with applying for a visa to Macau, and visitors could get it via self-service kiosk. But now, the visa issuance process has become more complicated and takes up to 10 working days. People must also have a Covid test that is valid for a week only. JP Morgan team noted: “We were overly hopeful on the prospect of pent-up demand, which we thought would overweigh the nuisances related to travel arrangement to Macau and stricter capital control.”

The situation with the gaming industry in Macau will improve if travel restrictions between Macau and Hong Kong are eased. Anyway, a 14-day quarantine is required for those who are back from Macau to Hong Kong, and this Covid measure is extended to December 31.

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