July Was a Good Month for Macau Casinos, but Trouble Could Be Coming

It is becoming apparent that Macau’s casinos have a long way to go before they can claim victory over the COVID-19 pandemic. The past couple of months have been a roller coaster for the gambling properties, and stability is likely still out of reach. July, however, was a good month, with the six casino operators reporting $1.06 billion in gross gaming revenue (GGR). That amount is 29% more than a month earlier.

Macau Casino GGR Still Unstable

In June, Macau’s casinos reported GGR of $817.7 million, a significant drop from the $1.3 billion they reported a month earlier. That flipped in July, with $1.06 billion coming in. Although the year-to-date performance is better than it was a year ago, there is still a long road ahead. The GGR is 528.1% higher than it was last year when the devastation brought on by the COVID-19 pandemic seemed to be endless.

June saw a drop because of new concerns of COVID-19 spikes being seen in different parts of China. Although some travel restrictions were lifted, there wasn’t a significant improvement in visitation to Macau. However, July got off to a better start, with the first 11 days seeing more inbound traffic and better results at the casinos. While the overall performance is still only at around 50% of what it was in 2019, Macau’s casinos are happy to get whatever improvements they can as they try to recover.

New COVID-19 Issues Begin to Surface

Just like in the US, which has already seen Nevada and other states bring back mandatory face masks, Macau is beginning to experience COVID-19 problems again. Although new cases in the city are not being reported, the virus is spreading across China, the leading feeder market for Macau’s casinos. With the increase in cases, traffic is going to fall once again. Analysts with the Sanford C. Bernstein brokerage expect Macau GGR to take a hit, but still believe it could improve overall. Analysts Vitaly Umansky, Louis Li and Kelsey Zhu predict an increase that might represent a month-on-month increase that is in the “low teens.”

Macau has implemented new travel restrictions as the number of COVID-19 cases spreads in China. However, for now, travel between the two areas has increased. This could change once again, though, as Macau has implemented new countermeasures as of this weekend. A negative nucleic acid test certificate must be shown upon arrival from mainland China, with the test having been administered no more than 48 hours prior to the trip. There are also new mandatory quarantine measures in place for those coming from specific locations in eight provinces in the mainland.

That doesn’t bode well for Macau’s recovery efforts and the Bernstein analysts have taken note. They assert, “As the [COVID-19] cases are still spreading across China, and Macau-Hong Kong travel is not likely to reopen soon, we forecast August GGR to be down 60 percent compared to August 2019.” The spread of the new Delta variant of COVID-19 might push the forecast down, however.