nothing goes anymore!
Falling casino revenues in Macau, the hub of the global gambling scene, are taking a heavy toll on the wider economy. With hundreds of businesses forced to close and unemployment soaring to its highest level since 2009, there seems to be no solution on the horizon. Let’s decipher.
After the dream, the nightmare: dizzying drop in revenues from Macau casinos
On June 1, the former Portuguese enclave Macau recorded one of its worst monthly revenues since September 2020. The grim news came after the local government warned that rising job losses, coupled with financial strains, could lead to social unrest and instability within the peninsula.
Indeed, gambling revenues in the month of May 2022 have plummeted (-68% year-over-year to $400 million). For comparison, although they are up 25% compared to May 2021, they are a far cry from the level reached in May 2019, when some $3.2 billion were recorded.
Recall that Macau, a special administrative region of China, is the only place in the country where playing in casinos is legal. Highly dependent on taxes on gambling, which constitute more than 80% of government revenueHowever, Macao has never managed to diversify its economy, or rather has never tried to do so…
Last month, the Chinese government hinted that it wanted to “ cleaning up the casino sector in Macau “This announcement is already having an impact on the operations of the establishments in the former Portuguese colony. According to Glenn McCartney, associate professor at the University of Macau: ” We are the most tourism-dependent city in the world. And given that we haven’t diversified for 20 years, that’s not going to happen anytime soon. There is no quick fix “.
Zero Covid policy, limiting capital outflows and repression
As Macau’s six casino operators face daily revenue losses and soaring debts, a minimum of seven establishments are expected to shut down by mid-year. According to local media reports, the management of the Emperor Entertainment Hotel said in April that it would close on June 26.
In addition to Beijing’s zero-covid policy, measures taken to stem capital outflows and crack down on the particularly opaque junket are the main causes of the gradual decline of Macau’s casinos. According to the Macau Economic Association, the local business climate index will remain poor in the next three months.