Silver lining seen as dark clouds dog the casinos

Macau's slowdown extended into last month, with gaming revenue falling 49.6 percent as China's snap lockdowns to control Covid-19 outbreaks discouraged tourists from visiting the gambling hub.

Gross gaming revenue plunged to 2.96 billion patacas (HK$2.87 billion), according to data released by the Gaming Inspection and Coordination Bureau. The results were in line with the median analyst estimate of a 50 percent year-on-year decline, extending a slump that started in March.

Revenue rose 35 percent from August, but it was still down 87 percent from pre-pandemic levels in 2019.

China has embraced lockdowns for their success in stamping out cases, with pressure to swiftly contain flareups building ahead of this month's Communist Party congress, where President Xi Jinping is expected to secure a precedent-busting third term in power. While some of the recent shutdowns have been relatively short - Chengdu endured two weeks - others have lasted for 40 days or more.

Macau's six casino operators are also facing uncertainty around licensing. Their permits to operate in the only part of China where gambling is legal will expire at the end of the year. They are also competing with a newcomer, Malaysia's Genting Group, for a maximum of six new licenses. Macau is expected to announce winning bidders by December.

The sector has been buoyed by plans for China to resume issuing e-visas for people visiting Macau by early next month, which would make it easier for travelers to obtain permits to enter the city. Tour groups will also be allowed to resume.

This month may also see an increase in tourism during the week-long National Day holiday, with analysts estimating just a 9 percent fall in gaming revenue. Still, it's uncertain how many Chinese will take trips, with authorities urging residents to stay put.

The Bloomberg Intelligence index of six casino operators rose about 9 percent last month, compared with a 14 percent fall in the Hang Seng Index.

On the other hand, Genting has emerged as a strong contender to unseat a Macau casino operator for a new license, analysts and executives say, unleashing possibly the biggest shakeup in the world's largest gambling hub in over two decades.

Genting has casinos globally including in Malaysia, Singapore, the US and the UK.

Its strong non-gaming track record, including operating two of the largest theme parks in southeast Asia, would be a big draw for Beijing, which has been urging Macau to diversify away from gambling and attract foreign tourists.

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