Analyst Expects Macau Casinos To Post $1 Billion Losses In The Second Quarter

macau casinos lost

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Casinos around the globe suffered a massive hit in revenue because of the lockdowns imposed by governments.

The gambling institutions closed doors to clients in mid-March because of the threat of the novel coronavirus. Casinos and its related sectors projected huge losses because of the prolonged stay-at-home mandates.

Business operations remained in shutdown for months, dragging revenues down to almost zero levels.

Governments decided to open the economy as treasuries near depletion gradually. They needed to choose between public health and the falling economy.

Casinos resumed operations in late-May as governments loosened travel business restrictions. The casinos were mandated to follow strict safety and health regulations, including social distancing and the mandatory wearing of face masks inside the casino floor. The strict implementation of new guidelines ensured the gamblers’ safety but limited the revenue for the casinos.

Capping of operational capacity impacts on casino revenue

The new coronavirus preventive measures imposed on the government attracted gamblers but cut the casinos’ revenues by almost a half. Health regulators ordered the strict implementation of social distancing protocols in the casinos. Guests needed to maintain four to six feet distance to reduce the chance of spreading the virus.

The casinos limited the number of players in table games to place distance between the players. Some slot machines were shutdown to follow social distancing. The number of guests in pools and restaurants was limited. People needed to wait in long lines to enter the facilities.

The new guidelines had an impact on the revenue of the casinos. A limited number of gamblers mean limited revenue collection. The casinos in many places reopened despite the continuing threat of the novel coronavirus to recover losses from prolonged lockdowns.

Bloomberg analyst estimates $1 billion losses

However, the industry is expecting reports of the massive decline in profit from casinos around the globe. The survey conducted on eight brokerages revealed that the six casinos operating in Macau are expected to post a negative quarterly EBITDA in the coming weeks.The report projected that SJM Holdings Ltd. And MGM China Holdings Ltd. will lead the year-on-year decline among the operators.

The estimate noted the decline in gambling revenue by more than 90 percent during the second semester because of the stay-at-home mandate aimed at preventing the spread of the deadly virus. After the Chinese province, Guangdong, investors saw hope lifted travel restrictions to the biggest gambling hub in the world. Stocks rallied after news of the lifting of the travel ban.

China continued the entry of visitors with individual visas (IVS). Berstein analyst Vitaly Umansky said the lifting of the restrictions projects high gambling demand in Macau. However, the high rate of new cases every day threatens the recovery plans of the casinos.

Health regulators around the globe reported a rapid increase in the frequency of new cases. Many countries imposed additional restrictions to prevent the spread of the virus. The virus infected more than 14 million people and killed more than half a million.

Experts believe that it would take time before things could go back to normal.

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