July 9, 2022 - 12:57 pm
Updated July 9, 2022 - 6:07 pm
Macao will shut almost all businesses, including casinos, for a week starting Monday as a COVID-19 outbreak in the Asian gambling hub showed few signs of abating, Macao Daily reported.
Essential business operations including supermarkets and pharmacies will remain open, the report cited the city’s officials as saying at a press briefing Saturday. Other businesses will cease operations from midnight at the start of July 11 to midnight July 18.
The city, which relies on gaming revenue for 80 percent of its income and had been avoiding a systematic shutdown of casinos, previously closed the venues just once before, in February 2020. Macao leaders had closed other institutions in preceding weeks, including schools, public venues and entertainment outlets such as bars and cinemas.
Gaming industry analyst Brendan Bussmann, founder of Las Vegas-based B Global, called the decision “a rather significant event” because it had been more than two years since its last closure.
“That said, the casinos were the last of all the businesses to shut down for the most part,” Bussmann said. “There’s been a continual shutdown of other services, including government, financial institutions and other things, so not surprising by today’s news.”
The Macao market is especially important to three Las Vegas companies: Las Vegas Sands Corp., the region’s market leader with five properties, Wynn Resorts Ltd., with three resorts, and MGM Resorts International, which partners with casino entrepreneur Pansy Ho on two properties.
A spokesman for Las Vegas Sands declined to comment and said it will be addressed in the company’s second-quarter earnings in the coming weeks. The earnings call date has not been announced.
MGM Resorts and Wynn Resorts did not immediately respond to a request for comment.
Any extended closure affects a company’s bottom line, said Josh Swissman, a founding partner of the Las Vegas-based Strategy Organization. He noted that the jurisdiction was already suffering from a weak economic recovery.
But, the Las Vegas-based companies may see the losses balance out because of the strong tourism demand elsewhere, Swissman said. Nevada casinos collected more than $1 billion in May, continuing a 15-month record.
“Anytime you shut down, no matter whether it’s for an hour, a day, a week or longer, that’s a significant amount of cash flow that is revenue that basically evaporates,” he said. “There are great fundamentals so far for the year coming out of all the Las Vegas properties so that balances things out with regard to what’s going on in Macao, short term and long term. And for former Las Vegas properties, like Sands, they’ve got Singapore.”
Macao is following China’s COVID playbook, relying on mass testing and the confinement of residents to identify and then quash transmission chains. But the policies have left the mainland mired in a cycle of unpredictable, stop-start restrictions that are taking an enormous economic and social toll.
The measure, which follows multiple rounds of mass testing, returns the enclave to its toughest pandemic restrictions. Macao on Saturday announced 71 new cases, bringing the total number of infections in the latest outbreak starting June 18 to 1,374.
Macao also locked down SJM Holdings Ltd.’s Grand Lisboa casino hotel after a cluster of 13 cases was found linked to the venue, trapping some 500 people inside.
The closures are likely to deal a noticeable blow to the gaming hub, which has been struggling with a slow return of tourists and slumping revenue as mainland China’s COVID Zero policies discourage travel to the enclave.
“Macao has been struggling as it has been already, partially because of the lack of visitors coming in and out of there to begin with,” Bussmann said. “So, while this will take a hit — and I’m sure we’ll hear about it as things progress on earnings calls that are coming up later this month and in August — but, from a revenue standpoint, revenue was already at a trickle’s pace based off of ‘19 levels.”
Beyond the virus, the casino industry’s facing other challenges including a new law that significantly increases government control over operations and Beijing’s crackdown on high-rolling gamblers to curb capital outflow.
The Review-Journal is owned by the Adelson family, including Dr. Miriam Adelson, majority shareholder of Las Vegas Sands Corp., and Las Vegas Sands President and COO Patrick Dumont.
Review-Journal reporter McKenna Ross contributed to this report.