Casino jurisdictions with a “‘living with the coronavirus’ mentality” and “faster vaccination rollouts” relative to other places, have seen improving gaming revenue, while casino jurisdictions that rely on inbound visitors from China, are having a “challenging” time, says a report from Fitch Ratings Inc.
Authorities on the Chinese mainland and in Macau have adopted a zero-tolerance approach to Covid-19. Macau has had three rounds of mass testing of its population, after infection cases were detected locally.
The detected cases led to tightening of rules for travel between the mainland and Macau, coinciding with pauses in recovery for the city’s casino gross gaming revenue, a number of analysts has said.
Macau, the only place in China where casinos are legal, has a largely quarantine-free travel arrangement with the mainland.
Fitch’s “2022 Outlook: Global Gaming” report states: “Jurisdictions with faster vaccination rollouts and ‘living with the coronavirus’ mentalities, like the United States, saw revenues fully recover in second half, 2021.”
Singapore and Malaysia – two Asia-Pacific casino jurisdictions reporting high percentages of vaccination among their populations – have also been introducing policies to open up international travel.
Fitch’s report noted nonetheless: “Asia Pacific remains challenging, specifically jurisdictions that rely on inbound Chinese visitation.”
The ratings institution added it expected a recovery in international travel and gaming revenues would “largely take place in 2023–2024”, but with “near-term volatility” due to “strict health codes” imposed by various jurisdictions.
Fitch also thought that “regulatory uncertainty” for the casino industry would be an issue during 2022. “In Macau, concessions expire in June and uncertainty remains on the rebidding process and regulatory and operating structure,” it states.
The document noted that most of the gaming entities issuing debt and rated by Fitch, had been taken off its ‘negative outlook’ list, due to “strong domestic recoveries”. But it added: “Negative outlooks are still prevalent in Asia Pacific,” particularly in those markets “more reliant on international visitation”.
Fitch also observed that some gaming equipment and content suppliers had been focusing on divesting certain assets to reduce their leverage, “such as International Game Technology [Plc] and Scientific Games Corp,” and that this “could result in future positive credit profile momentum”.
