Macau is Doing Slower in Recovery Than Expected

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Macau is Doing Slower in Recovery Than Expected

The gambling industry has suffered from the global pandemic non less than any other industry and business. Because of the pandemic and massive closure of the traditional casinos, most of the gambling venues had to close for an unconditional period of time or move online.

One of the biggest gambling markets is in Macau. It is the gambling capital of China and generated billions in revenue from the gambling industry. The Macau casinos had to close down for the second time in history last March, though it was the first and hopefully the last time when the casinos had to close down completely and lay off hundreds of employees.

The 2020 statistics are now officially revealed

Macau casino leaned on mass-market gamblers to an unprecedented degree in the final quarter of 2020. This tendency is likely to be maintained in following China’s war on cross-border gambling. The reports were released last Friday by Macau’s Gaming Inspection and Coordination Bureau (DICJ). The reports revealed that the local gambling operators generated combined revenue of MOP22b, which is around $3 billion in the three months period, ending on December 31st.

The final statistics are far less than the numbers from the same period of the last year but are way better than the third quarter of 2020, which was only MOP9 billion. MOP72.3 billion is the amount of revenue generated by the casino operators throughout the final quarter of 2019. The final quarter of 2020 brings the total revenue sum to slightly over MOP61 billion, which is barely one-fifth of 2019’s total revenue of MOP293.3b. The recent numbers reflect the unprecedented challenges for the biggest casino market worldwide.

The biggest contrast is observed in the baccarat contribution to the revenue. The Q4 result for baccarat is 54% share out of the total MOP11.85b sum. This is very surprising news, as the baccarat contributed only 24.5% to the MOP7.6 billion the first time VIP has slipped below 40% share. If we exclude the baccarat income, the mass market gambling accounted for 65.4% of the Macau state overall revenue.

The new big brother

The increased interest in baccarat was also outlined in the Goldman Sachs report, which was issued earlier that week. Currently, the VIP rooms in Macau are all controlled and operated by the Suncity Group junket, which is the biggest operator in the state. This has not always been like this, as back in 2019, Suncity Group only operated 20% of levels.

The Suncity Group is operating Macau VIP rooms and using the selective basis method for visitors from Asia. Thus, the market faces a slower recovery than expected and hoped by the operators. The reason for the slow recovery can be extremely strict measures for the COVID-19 testing and quarantine requirements in both Macau and other parts of China.

The recovery is inevitable and sooner or later, the market shall regain its greatness, though in a short-term perspective getting back to where it was, is almost impossible. This is also determined by the amended laws, initiated by the Chinese government. According to the new Criminal Law, those who solicit mainland residents to travel about, which in this case include Macau, for gambling purposes will be sentenced to up to 10 years in prison. The new law has seriously challenged the local operators.

Moreover, the VIP gamblers are also at risk if Beijing identified them as having traveled abroad for gambling purposes. This is due to the social credit scoring system imposed in Beijing. The high-rollers should also avoid being detected in gambling activity, as they might earn deductions from their scores. This might also limit their traveling opportunities for the future.

Nick comes from the financial services area. He is an expert in currencies and stock trading, yet gambling has always been his passion. At CasinoPlayersReport Nick is overviewing the financial health of listed companies within the iGaming sector, recent regulatory updates, and other major news.

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