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Macau Faced Some Mixed Blessing: Casinos On, Revenue Off

Article by : Helen Sep 8, 2020

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Macau was always recognized as one of the most popular destinations for international players. Everyone looking for the maximum variety of gambling and exclusive entertainment most often found them in Macau.

At the moment, the region is under the heavy burden of Covid-19. Experts do not even know in advance when the situation can change for the better. The coronavirus pandemic has become a real test for the city’s budget, mainly relying on tax deductions from casinos and entertainment establishments. The coronavirus took full control of the local economy after land-based casinos closed their doors for months.

Previously, it was believed that after the casino market restarted, the businesses will quickly go uphill. However, this optimistic hypothesis turned out to be wrong. Officials now admit that gaming operators and the regulators will have to make every effort before the city’s economy gets back on its feet. According to the Gaming Inspection and Coordination Bureau (DICJ), August’s total gambling revenues in Macau dipped 95% compared to 2019. Based on preliminary estimates, gambling establishments faced a very negative trend. All indications are that casino operators’ revenue have been gradually dropping over the past 11 months.

As reported by official data published by DICJ, gross income from land-based casinos reached $166 million in August. Gaming operators recorded a 95% decrease in gross revenue over the previous year. July was no exception, with total revenue of $167 million. These figures are 94.5% less than in the same period in 2019. Based on this data, over the past five months, Macau gambling houses have recorded a 90% drop in income compared to last year.

The colossal drop in revenues over the past 11 months is a fundamental issue for the government. Hopefully, the government has spent the received tax payments wisely in recent years, as this will allow the region’s economy to survive Covid-19.

Before the global pandemic outbreak, the government was developing plans to diversify tax payments and increase tourist flow to the region. There is no doubt that now is the best moment when these plans need to be stepped up. The administration has decided to oblige all tourists to take a Covid-19 test upon arrival in the region. This tactic could scare off a fair number of visitors who wish to visit Macau and unwind after a strenuous home quarantine.

Obviously, the decline in tourist flow will put additional pressure on the entertainment industry. In February, Macau officials recommended 41 casinos to close their doors for at least half a month to avoid a possible coronavirus outbreak hitting Mainland China. Subsequently, this move led to the fact that gambling’s world capital went into standby mode and monthly lost colossal amounts of profits. American casino operators have also been severely affected by Covid-19. Some of the US market’s largest representatives, namely Wynn Resorts and Las Vegas Sands, the largest taxpayers in the region, temporarily ceased their activities.

Macau, once an incredibly prosperous area for gambling companies, has become entirely dependent on Covid-19. The former Portuguese colony returned to China’s control in 1999 and is the only region where gambling is permitted. This situation played into the hands of local gaming companies, which attracted millions of visitors from mainland China every year.

Macau quickly developed into an International Entertainment Center, exclusive casinos, and luxury shops as passenger traffic grew. Using tax deductions from land-based casinos, the city authorities have made every effort to turn this region into the capital of gaming entertainment. It’s high time for the authorities to support casinos relaunch.

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