Chinese New Year Unlikely to Boost Macau Casinos Revenue

Local authorities in a number of Chinese provinces on the mainland cast fresh doubts on any prospects for the gaming industry in Macau after issuing advisory notes to their residents to avoid travelling during the festive Chinese New Year period, GGRAsia speculates in an article.

Quiet Chinese New Year in Macau

China’s State Council set this year’s celebrations period from February 11 to February 17, giving people a week-long break for the holiday, but Guangdong province which provides a lot of customers for the casinos in the Special Administrative Region (SAR) of China as it is next door, advised its residents to spend the holiday period within the province to avoid the risk of spreading the coronavirus.

And Guangdong was not alone, followed by other Chinese provinces and major cities which issued similar calls to their residents, looking to prevent another outbreak of the infectious disease caused by the virus.

People who follow the developments in the Macau gaming industry believe these advisory notes would only hurt the operators, besides the uncertainty stemming from the resurgence of new coronavirus cases reported in several Chinese provinces, casting further doubts on the potential for revenue for the casinos in Macau during the festive period.

The advice, if followed, would decrease the level of footfall in an industry 65% dependent on mass-market play in the fourth quarter of 2020, and could reverse some signs the slide is near its end, as December gross gaming revenue gave reasons for optimism despite negative developments related to junket operators.

By the end of 2020, Chinese authorities passed an amendment to the country’s criminal law to start punishing entities organizing gambling trips for its residents outside of the country, including to the SARs, effective March 1, 2021, raising the level of anxiety among junket operators.

VIP Business Dampened

Junket operators, which are cautiously following the news, worried that China may tighten the issuance of travel visas for the second time, would also wait to see how the new criminal law amendment is enforced. Macau officials already vowed to help the efforts of authorities on the mainland to enforce the new criminal law amendment.

Driven by the level of uncertainty in the sector due to several factors such as the ability to contain the sporadic outbreaks of the virus and China’s resolve to crack down on illegal banking activities, junkets have already braced themselves for the worst during 2021. Some of the operators moved to extend the period of non-paid leave for their employees seeking to keep costs low.

Forecasts for the industry range from 15% to 20% for the VIP segment and up to 80% for the mass play market compared to pre-pandemic levels, but the overall expectation is that casinos would not reach in 2021 anywhere near 2019 levels.