Coronavirus Strikes Macau's iGaming Revenue
Published February 12, 2020 by Lee R
Strict health measures in Macau are stifling transportation and play.
The iGaming industry is not immune from corona.
Big Drop in January
Amid concerns about the spread of the notorious virus, revenue in China's gaming capital suffered a precipitous 11.3% drop for January.
Impact
Though the double figure drops still fell far short of the loss predicted by many gaming analysts, the virus continues to affect the region through the travel bans limiting commerce and passage to the island protectorate, with Fitch Ratings analysts forecasting some $2b in cash flow that US-based casinos operating in Macau stand to lose.
Macau Gaming Inspection and Coordination Bureau called January's $2.76 billion in total revenues a depressed figure, with the virus clearly offsetting what is traditionally a time of spike in play.
US Casinos Hit
Las Vegas Sands perhaps summed it up the best in confirming an 80% drop in visitation during the holiday. Other US holdings taking hard hits included Nevada-based operators Las Vegas Sands, Wynn Resorts and MGM Resorts International, and Nasdaq-listed and Hong Kong-based Melco Resorts and Entertainment.
Disruptions
The nature of the border stoppage has resulted in dozens of flights and ferry services being halted from mainland China to the island of Macau, with virus-related precautions resulting in stoppages of public Lunar New Year celebrations and extension of the holiday break.
Disappointing Expectations
Though only seven of the thousands of coronavirus cases in China have been detected in Macau, the spread of the virus has nonetheless nullified hopes that Macau's gaming market would make a long due recovery after an overall decline of 3.4% in 2019 brought the region its first sequential revenue drop since 2016.
Comparing the Situation
In comparative situations, Fitch gaming analyst Alex Bumazhny offered the Asian swine flu example of 2009, when gaming revenue dropped 19% in Q1 and 16% drop in Q2. Bumazhny predicted more precipitous drops in the current scenario.
Outlook
The reason for the prediction of stronger drops is the quickness with which authorities are implementing comprehensive travel restrictions this time out. These restrictions will remain palpable and visible harbingers of things to come in Macau in the near future, with the bans causing extended drops and the lift sure to result in a rise towards the hoped for original recovery.
