Macau Casinos Value Soaring as Tourism Opens Up
China’s longstanding ban on international tourism appears to be coming to an end, spelling good news for Macau’s casino operators – as they see a major uptick in footfall. Shares in the Macau casinos saw a 13% boost early this week as the city’s leadership acknowledged the changing landscape around the COVID restrictions that have been in place for the past several years. Given the changing approach to containing the virus and the lower levels of positive cases, the country will once again re-instate the e-visa scheme – thus enabling group tours from the mainland into Macau.
The airports in Macau will begin to accept incoming flights once more from the neighboring mainland. The influx of overseas tourists will stimulate the revenues of Macau’s top casino brands, following years of subdued activity during COVID-19. ©JESHOOTS/Pixabay
The city of Macau enjoys a special economic status compared to mainland China, and since the early 2000’s it remains the only place in Chinese controlled territories where gambling is legal. The country has blocked the process for allowing citizens to freely travel between the mainland and the city of Macau for several years, but in November 2022 this is all set to change. Macau’s chief executive Ho lat Seng said in a statement just on Saturday that they are now ready to once again open Macau up to the outside world.
As a former Portuguese colony, the city of Macau has implanted a strict set of rules around containing the COVID-19 pandemic. The issue for the past three years though, casinos had no way to generate revenues and bring in new customers. Without the freedom of movement to travel from international regions into Macau, the city’s casino industry has been contracting significantly – with gross gaming revenues and equities taking a massive hit.
This announcement of relaxing the border controls going into Macau is massive news for the city’s casino sector, not only can they begin to solidify the revenue from international gamblers – but reinvest their earnings in the expansion of pre-planned projects, and long-overdue refurbishments that had been put on pause. Coming slightly earlier than expected is only good news for this industry, many of whom had been banking on the relaxation to come at the first quarter of 2023.
Sands China, Wynn Macau, MGM China, All on the Rise
Quantifying the financial impact of the border relaxation announcement is simply derived. Major Macau stocks all popped this week in celebration, and morning trading at the Hong Kong Stock Exchange saw Sands China leap a massive 13%, all the other major casinos in the city followed a similar pattern. The next few weeks will likely see further gains as more details and forecasting solidify around the real demand for gambling that still exists within mainland China.
Another boost coefficient in the real demand for Macau gambling products is the recent crackdown on POGOs initiated by China. The recent crackdown in the Philippines on casino operators aimed at the Chinese mainland means there are far fewer options when it comes to online gambling in China. Without the wide availability of Philippines online gambling sites for Chinese citizens to easily access, there will likely be an extra demand on the land-based casinos in Macau when the city opens to international tourists.
It’s nothing but good news for casino bosses in Macau this week, after the numbers for a return to old ways all point towards a resurgence in net revenues. The past three years have been rough, and many operators began planning for life outside of traditional gambling, as the old revenue streams looked so precarious. However, China’s pre-emptive announcement that they are planning to once again open the potential for international travel has caused a run on the Macau casino capital and equities market.
Future business prospects are not going to be completely plain-sailing, however. There are numerous question marks surrounding the longevity of the Macau casino sector. Particularly concerning remains the looming license expiry of several of the biggest Macau casinos. Beijing his signaled that it is no longer prepared to accept a thriving casino sector on its shores completely dominated by Western owned enterprises. Looming bilateral laws that would force equity to be diluted so domestic ownership is equal or more than 50% threaten to destabilize the investment pipeline into Macau.
