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Macau Gaming Revenues Drop in September: Will the Slump Stay?

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Despite easing of travel restrictions in the world’s largest gaming hub, Macau, casinos continue to witness dismal footfall. Thus, gaming revenues from Macau contracted for the 12th consecutive month in September, with gross gaming revenue plunging 90% or more for the sixth straight month.

Gross Gaming Revenue Details

Per Macau’s Gaming Inspection and Coordination Bureau, gross gaming revenues nosedived 90% year over year in September to 2.21 billion patacas ($277 million). In April, May, June, July and August, gross gaming revenues from the region declined 96.8%, 93.2%, 97%, 94.5% and 94.5%, respectively. Notably, sequential improvement was driven by the allowance of tourists’ visa applications in China mainland, starting late August.

However, factors such as slower visa processing, mandatory coronavirus testing and lower traveling confidence sue to the pandemic are major impediments.

Moreover, in the first nine months of 2020, GGR fell 82.5% year over year to $38.6 billion patacas. In fact, casino operators in Macau were already grappling with a slowdown in China when the pandemic aggravated their woes. Per Macau's Statistics and Census Bureau (“DSEC”), in the first half of 2020, the region witnessed a decline of 83.9% in visitation.

Decline in gambling revenues from Macau is likely to impact companies, including MGM Resorts International (MGM - Free Report) , Melco Resorts & Entertainment Limited (MLCO - Free Report) , Wynn Resorts, Limited (WYNN - Free Report) and Las Vegas Sands Corp. (LVS - Free Report) , which generate majority of their revenues from the region.

So far this year, the Zacks Gaming industry has declined 20.5% against S&P 500’s increase of 4%.

The Road Ahead

Although visitation is likely to improve gradually in the coming months, it is expected to take time to reach the pre-pandemic levels.

However, with increased focus on streamlining of cost structures along with optimization of business processes, the industry on a whole has shown some resilience. Also, relaxations in quarantine requirements on arrival is likely an initiative in the right direction.

Nonetheless, with more easing of travel restrictions along with expected rise in traffic on account of Golden Week holiday, sequential improvement in gaming revenues from Macau is likely in October.

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