Macau Casinos Shut Down for 15 Days to Prevent Coronavirus Spread
Macau which is the biggest gambling hub in the world has ordered all of its casinos to cease operations for at least 15 days as Chinese authorities scramble to prevent the continued spread of the coronavirus. The virus, similar to SARS, has affected over 20,000 people in China, with 425 fatal cases.
The shutdown is set to begin on February 5. It is the latest in a series of woes for Macau: the country’s gambling industry is recovering from its largest decline in annual revenue since 2015. The shutdown is the longest ever ordered in Macau, more than ten times the duration of the 33-hour shutdown in 2018 due to a typhoon.
There are currently 10 confirmed cases of the coronavirus in Macau. The two-week suspension of casino operations is expected to result in a first quarter decline of 50% from last year; if the casinos remain closed for the remaining of the quarter, the decline will be above 70%.
Ho Iat-seng, the Chief Executive of Macau met with casino industry representatives on 04 Feb to discuss their future plans; Iat-seng has indicated his belief that the city will be able to withstand the massive loss associated with the casino industry shutdown.
Industry analysts fear that the shutdown could further drag down the weakening profits of Macau casinos in recent months. Macau’s casinos employ thousands of employees, many of whom are foreign workers. The casino operators are responsible for the welfare of their employees and will have to shoulder all costs and expenses associated with their employees’ healthcare. Analysts believe that this additional cost could result in nil near-term profit.
Coronavirus Shutdowns Latest in Macau Casinos’ Woes
Macau’s gambling industry has been hit with a number of setbacks, resulting in four straight months of falling revenue amidst a weak 2019 caused by decreasing tourists due to Hong Kong protests, a weakened Chinese economy and a trade war. Beijing has now ceased all visas to individuals traveling to Macau—wealthy gamblers and tourists are now barred from visiting Macau, where 80% of their yearly revenue comes from gambling.
The Bloomberg Intelligence index of Macau operators declined to as low as 3.7%; all stocks in the gauge fell. The worst performers were Galaxy Entertainment Group Ltd. and MGM China Holdings Ltd.
Due to the ongoing crisis and a shutdown that may extend beyond two weeks, Macau’s gross gaming revenue is expected to remain weak near-term.