Macau is a city and a special administrative region of China that belonged to Portugal for 500 years and has been under Chinese jurisdiction since 1999. Macau depends on gambling for most of its profits, mainly due to the fact that gambling is prohibited in mainland China. Years ago, for the first time in 2006, Macau overtook Las Vegas in gambling revenue, which was up to 7 times higher than Las Vegas.

However, due the pandemic and the zero covid policy, things have completely changed. Macau has introduced various bans and restrictions, thus losing its main breadwinners. In December 2022, the restrictions were gradually relaxed and gambling-loving tourists slowly started to return.

However, the casinos were left unprepared for a quick reopening, so they currently have a problem with staff shortages. This was reflected, for example, in the lack of hotel rooms. Some hotels report that they are only offering 50 percent of their capacity, leaving thousands of rooms unavailable. But the services offered are also a problem - there is a lack of staff in restaurants, rooms in hotels are cleaned only after the guest has checked out. Thanks to these problems, visitors complain about bad service and even have to pay a lot more for it, because the prices have gone up.

At the beginning of 2020, more than 44,700 employees were released from their work, up to 17,600 from the hotel sector who were not local residents. Dealers or floormen left for casinos in Singapore or Vietnam. The government is pushing for casinos to employ the domestic population, and even if local residents show interest in positions such as dealers, floormen or accountants, the sector mainly lacks support staff in hotels and restaurants, and locals are said to show no interest in this type of work.

To make matters worse, the Chinese government is pushing license holders with new regulations. The six largest licensees, Galaxy Entertainment, Melco Resorts & Entertainment, MGM China, Sands China, SJM Holdings and Wynn Macau, have now been granted licenses for only 10 years, up from 20 years, and will also face various new regulations and frequent checks. In addition, casinos had to commit to spend $14.9 billion over 10 years on building non-gaming businesses.

Wellness centers, congress halls, water parks, amusement parks, art exhibitions and various tourist attractions are to be built. The companies have the obligation to submit the schedule of these investment plans to the government. However, the non-gaming income of the companies was e.g. in 2019, only less than 15 percent, but the government ordered that within 10 years these revenues should be more than 30 percent.

Although revenue has started to rise this year, it is estimated that gaming revenue in 2023 could reach only 50 percent of 2019 revenue. A full recovery is expected to take at least two years.

But let's move on to specific numbers. Macau generated just $5.3 billion in gross gaming revenue in 2022, down 51 percent year-on-year and well below $35 billion in 2019. Las Vegas recorded $7.5 billion in the first 11 months of 2022. In the first two months of 2023, Macau casinos had revenue of $2.77 billion, up 55.3% from the first two months of 2022, the best figure in three years.

Lawrence Ho of Melco Resorts & Entertainment said that they got into a lot of debt during the pandemic. The company's debt was $8.7 billion at the end of 2022, an increase of $3.9 billion from 2019. The main goal of the company for the next 2-3 years will be to pay off debts.

Wynn Macau, which did the worst in 2022, had a year-on-year drop in revenue of up to 52 percent. That's why this month they announced a plan to issue $600 million in bonds due in 2029.

The highest revenue chieved by Macau was in 2013, when the gaming market generated up to 45 billion dollars. A Wall Street Journal report at the time predicted that the gambling market would reach $77 billion in 2017. But eventually that never happened. Las Vegas on the other hand reached $14.8 billion in revenue in 2022, which was its all-time high.

The Macau Government Tourism Office has decided to deal with the whole situation. From April 10 to June 30, tourists can enjoy a limited-time "Buy One Get One Free" offer when purchasing a return ticket by Air Macao departing from Singapore, South Korea, Japan, Thailand or Vietnam. The "Macao Treat" program offers free return tickets to tourists staying overnight in Macau. The promotion also applies to buses and ferries. Can Macau beat Las Vegas again?

Source: Financial Times, Cardplayer, Bloomberg, DailyHive, Fnbox, Casino.org, Wikipedia