Macao casino coronavirus closures result in 87.8% decline in revenue

Gross gaming revenue plunged 87.8 percent from a year ago in February in Macao, the Gaming Inspection and Coordination Bureau reported Sunday.

The massive decline is being attributed to the government’s 15-day closure of all casinos in the market in an effort to stem the spread of the coronavirus.

It was the steepest revenue downturn in the market’s history. The 15-day closure was unprecedented, although marketwide closures have occurred for one or two days in the aftermath of typhoons.

The bureau that monitors revenue in Macao’s 41 casinos reported 3.104 billion Macanese patacas generated in February compared with 25.37 billion patacas a year earlier.

The report comes a month after an 11.3 percent decline in revenue in January.

For the first two months of 2020, revenue is off 49.9 percent to 25.229 billion patacas, or $3.15 billion, compared with 50.312 billion, or $6.28 billion, a year ago.

Three Las Vegas-based casino companies operate in Macao, generating between about 30 percent and 60 percent of their companies’ revenue in Macao — Las Vegas Sands Corp., Wynn Resorts Ltd. and MGM Resorts International.

Analysts are expecting revenue downturns to continue in Macao.

John DeCree, an analyst with Las Vegas-based Union Gaming, said in a report to investors that casinos and gaming stocks with exposure to Macao started reacting to coronavirus-related pressure in January, while most of the price action for domestic stocks occurred at the very end of February.

“Year to date, Macao-related gaming stocks have still underperformed U.S. domestic gaming stocks, with the exception of gaming suppliers, which have experienced similar year-to-date declines as Macao,” DeCree said in his report.

Analyst Barry Jonas of SunTrust Robinson Humphrey, Atlanta, said in addition to the 15-day casino closure, general consumer fear impacted visitation at times when the casinos were open.

“We expect travel restrictions to continue limiting any meaningful rebound in visitation and gross gaming revenue through March and likely beyond,” Jonas said.

Analyst Carlo Santorelli of the New York office of Deutsche Bank said it’s possible the Macao market won’t fully recover until next year, and he has estimated declines greater than initially forecast.

“Post the February result and, more specifically, the reset for current market conditions, our first-quarter gross gaming revenue forecast goes to -57 percent (-41 percent previously) and our 2020 forecast goes to -33 perceent (previously -17 percent),”Santorelli’s report said. “Our 2021 gross gaming revenue forecast now calls for 40 percent growth (previously 31 percent).”

Johns Hopkins University, which is monitoring the coronavirus worldwide, on Monday reported 90,130 cases worldwide with 80,026 in Mainland China and 10 in Macao. Johns Hopkins says 3,083 have died as a result of the virus, but 45,575 have recovered.

In the United States, 102 cases have been reported as of end of day Monday with six deaths in the state of Washington.

The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson. Las Vegas Sands operates six properties in Macao and one in Singapore.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.