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Macau gaming revenues dip 93.2% in May

Continued travel restrictions and the lingering effects of the coronavirus pandemic depressed Macau’s gaming revenues during May as casinos experienced a 93.2% decline to $221 million, according to figures released Monday by the Gaming Inspection & Coordination Bureau.

Analysts said the investment community has somewhat written off Macau’s gaming market, which has seen revenues decline almost 74% through the first five months of 2020. Their interest will perk back up when travel to the region from Hong Kong and the neighboring Guangdong region becomes more normalized.

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The Macau government has kept limitations on individual and group visas into the market. Transportation options are also reduced. Stifel Financial gaming analyst Steven Wieczynski said it could take five to eight months for Macau’s revenues to stabilize and show improvement.

Nevada-based casino operators Las Vegas Sands, Wynn Resorts, and MGM Resorts International, all have large holdings in Macau, a market that produced $36.5 billion in gaming revenues in 2019. Through May, Macau casinos – the first gaming market to be impacted by COVID-19 – has produced just $4.13 billion in gaming revenue.

“At this point, we don’t believe investors are even going to care what June gross gaming revenue data looks like given the visa restrictions remain in place and until those are removed, we don’t believe investors will really care what the market looks like,” Wieczynski said in a Monday research note.

“We fully believe that investors understand what the Macau market is up against at this point and remain prepared for a horrific near-term timeframe,” he added.

Macau gaming revenues slide began in January when the first signs of the outbreak forced cancelations of the market’s lucrative Chinese New Year celebrations. In February, casinos were closed for 15 days due to a government-ordered shutdown.

Despite the depressed gaming numbers, Las Vegas Sands is continuing with its planned $2.2 billion in renovations and expansions to Macau properties, including a transformation of Sands Cotai Central into Londoner Macau, a London-themed resort.

Analysts pointed toward an expected change in travel guidelines starting in June, including a health code system in Hong Kong in which cross-border travelers must offer proof of a negative COVID-19 test, likely taken within seven days.

Hong Kong’s required 14-day travel quarantine for arrivals from Mainland China, Macau, and Taiwan is scheduled to expire on Sunday. However, Jefferies gaming analyst David Katz cautioned the Hong Kong government has previously extended the entry restrictions, which could occur again.

Macau’s gaming revenue slide actually improved slightly between May and April – 93.2% compared to 97%. But Katz agreed that investors are no longer concerned by the raw numbers and are looking for signs that visitation to Macau will return uninterrupted.

“We believe more pivotal is the timing of border, travel and quarantine restrictions being eased,” Katz said. “Border reopening and quarantine relaxation could depend on Hong Kong.”