Macau Casinos Face Weakest Post-Reopening Quarter

The gambling hub of Macau is currently facing challenging times. The city's casinos are grappling with a significant decline in revenue, making this quarter the weakest since the reopening of gambling operations. The FIFA World Cup is particularly diverting players' attention, and lower hold rates are further impacting earnings.

Analysts and operators are looking at the figures with concern. It appears the market is recovering more slowly than hoped.

Numbers and facts

Recent data shows a clear downward trend. In November 2020, Macau's gaming revenue fell by 70.5 percent to 845.34 million USD. This was even worse than the 65 percent drop analysts had anticipated. From March 2020, Macau experienced six consecutive months of revenue declines exceeding 90 percent. In June 2020, monthly gaming revenue hit a historic low of 89.7 million USD, a 97 percent decrease year-over-year.

Overall, Macau's gaming revenue plunged by 80.5 percent in 2020 to 6.58 billion USD. Macau hosts 41 casinos. Only three US casino companies, Las Vegas Sands, MGM, and Wynn, operate properties there. In contrast, Nevada's gaming revenues in October declined by 19.5 percent year-over-year, and by 36.5 percent for the full year 2020 up to October. This indicates that Las Vegas casinos are recovering faster than Macau's.

“Macau casinos face 50 to 80 per cent potential slide in revenue in the next two or three months amid closure order.” - No specific person mentioned, South China Morning Post (2020)

Background

The situation in Macau is complex. After a two-week pandemic-related closure in February 2020, with reopening on February 20 under strict conditions like mask mandates and social distancing, hopes for a quick recovery were high. However, the reality is different. The global economic situation and ongoing uncertainty are influencing players' travel behavior. Moreover, the FIFA World Cup is capturing the interest of many potential casino visitors.

The pandemic has severely impacted the global gambling industry, with Macau at its epicenter. Although monthly figures slightly increased after the June 2020 low, a full return to pre-crisis levels is not yet in sight. Analysts predict that recovery in both the US and China will extend well into 2021. The biggest issue remains customer confidence and their willingness to travel and play in casinos on a large scale again.

Why it matters for German players

The problems faced by Macau's casinos do not directly affect German players. In Germany, the State Treaty on Gambling 2021 (GlüStV 2021) strictly regulates the online gambling market. Players in Germany can only play with providers holding a German license from the Joint Gambling Authority of the Federal States (GGL). These providers are listed on the GGL's so-called whitelist.

The GlüStV 2021 introduced strict rules: a monthly deposit limit of 1,000 euros for all providers and a stake limit of 1 euro per spin for online slots. Furthermore, the cross-state gambling supervision system (LUGAS) monitors compliance with these limits and protects players from excessive gambling. Bonus offers are also strictly regulated. I, Lisa Lustich, strongly advise German players to stick to GGL-licensed sites to ensure legal compliance and enjoy the best possible player protection.

What it means for GGL-licensed casinos

For GGL-licensed casinos, the situation in Macau means little. They operate in a completely different regulatory environment. The German market is strongly focused on player protection and regulation, whereas Macau primarily targets tourism and high rollers. The stability of the German online gambling market is based on the clearly defined rules of the GlüStV 2021. This creates a secure environment for players and operators. German licensees are bound by these regulations. They must connect to the LUGAS database and adhere to deposit and stake limits. A revenue decline like in Macau is unlikely for German online casinos due to this structure, as the markets are not directly comparable.