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Pandemic Forces Macau Gaming To Pivot Or Suffer

Article by : Helen Oct 12, 2020

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While there were positive signs for Macau’s gaming industry in 2019, the special-administrative region of China was uniquely vulnerable to the Covid-19 epidemic. To maintain its separate governing and economic systems from the mainland, Macau will have to find solutions to diversify its over-reliance on the gaming industry. The good news is that leaders were aware of the challenges Macau faced even prior to 2020, but now they’re working against time and a pandemic.

Early in January of 2020, the Secretary for Economy and Finance, Mr. Lei Wai Nong, encouraged patience and cautious optimism when it came to Macau. At the time, the region anticipated opening multiple casinos and resorts within the next eighteen to twenty-four months. Casinos would be suspended a little over a month later, from February 4th to the 15th, and then gaming halls and casinos were given a 30-day grace period to reopen. On March 20th, thirty-seven of Macau’s thirty-nine casinos were re-opened under the Health Bureau’s Guidance on disease control. Some of the measures casinos had to implement included: body temperature screenings of both employees and patrons before entry, face masks for both employees and patrons, increasing the distance between gaming tables, prohibiting patrons from eating or drinking at gaming tables, and ensuring that every person on the premises had completed the Government’s Personal Health Declaration.

Even with the safety measures in place, Macau managed to have 80% of the region’s casino tables in operation by March 20th, representing an estimated 5,400 gaming tables. Even prior to, the Centre for Gaming and Tourism Studies was adamant that the region and gaming economy of Macau must begin to implement non-gaming attractions to help bolster the entire industry. Their findings related to exposure and adaptation theory is best understood here:

When people first start to gamble, they tend to experience novelty and are particularly interested in gaming. However, their participation reduced gradually as the novelty and enthusiasm wore off over time. As the excitement and novelty of gaming patrons drop, they will obtain a more objective view and understanding of gambling with a higher sensibility in their gambling behavior.

The fact that all gamblers, especially experienced ones, become more discerning over the games they’re willing to play, how much they bet, and how often they gamble, means that the region needs to start slowly shifting its economic dependence away from gaming, and towards other tourism-related industries that can function symbiotically with the roster of casinos and resorts already in place.

The University of Macau (UM) and the Institute for the Study of Commercial Gaming partnered up to conduct a workshop and discuss some of the potential benefits and setbacks to expanding the non-gaming industry in June of 2020. The workshop partnered senior executive gaming operators with scholars from the Faculty of Business Administration Department of UM to discuss the on-going trends in non-gaming attractions as well as deliberated their opinions over real-world cases. Their goal was to help gaming operators plan more proactively for their future while still following the SAR government’s guidelines for non-gaming elements of the industry.

Despite Macau’s best efforts, the Covid-19 pandemic is still ravaging its gaming industry in 2020. Macau had a hotel occupancy rate in October of 2019 of 86.9%, in 2020 the industry is only estimating a hotel occupancy rate between 30% and 40%. Drastic reduction in the gaming business means that Macau’s gaming operators must not only hold on but at the same time, political leaders must plan and begin to implement the diversification of its own tourism industry.

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