Jul 21, 2020 Newsdesk Latest News, Macau, Top of the deck
Macau’s VIP gaming sector has not seen much recent uplift in business, despite the relaxation from July 15 of quarantine arrangements for travel to the neighbouring Chinese mainland province of Guangdong, industry sources have told GGRAsia. Such measures had been in place as part of efforts to stem the further spread of the Covid-19 pandemic.
The key to the recovery of the high-stakes VIP gaming business, which in normal trading times accounts for around half of Macau’s casino gross gaming revenue (GGR), is the resumption of the Individual Visit Scheme (IVS), an exit permit system for mainlanders from certain Chinese cities, the people added.
Macau had about 2,000 visitors daily in the first few days following the new rules introduced on the Guangdong side, according to the head of Macau’s tourism agency. That is about four times as many per day as it got in June, but still hugely down on pre-crisis daily levels.
The new rule ended the need for people to undergo quarantine when they return to Guangdong from Macau. Industry analysts had said the now-abandoned protocol had created a disincentive for mainlanders to come to the city in the first place. Mainlanders had mostly not needed to go into quarantine when arriving in Macau.
Having even a limited easing of travel “is better than” not having such a move, said Kwok Chi Chung, president of a junket trade body called the Macau Association of Gaming and Entertainment Promoters, in comments to GGRAsia. But he added the sector had not seen “much difference” following the measure.
Two separate sources employed at major junket firms – who asked not to be identified – had the same view when approached by GGRAsia on the topic.
Mr Kwok further noted: “This measure is the first step in the gradual process for Macau and the mainland China government in resuming normal travel ties.”
He added the VIP trade hoped the IVS system could restart soon, “first in Guangdong, and then gradually in its neighbouring provinces”.
The absence of IVS “remains the issue that bars our patrons from visiting our places, from what we have understood from them,” added the first of the two junket sources in comments to GGRAsia.
Brokerage Sanford C. Bernstein Ltd gave some commentary on the latest outlook for the Macau casino industry in a Monday note. “The timing of any restart [of IVS] and the phasing of IVS and group travel will determine when GGR begins to pick up again significantly and at what pace,” wrote analysts Vitaly Umansky, Tianjiao Yu and Kelsey Zhu.
August would “most certainly see similar declines” in GGR judged year-on-year as compared to prior months this year, “if no travel easing occurs,” subsequent to the current limited measures, they added. The analysts mentioned July GGR might contract by 93 percent.
Covid-19 test for players
Another hurdle for the recovery of gaming business is that since July 15, Macau has required anyone wishing to enter one of the city’s casinos to provide a test certificate proving they are free from Covid-19 infection, as well as needing to undergo the existing steps of a temperature check and a self-declaration on health status under Macau’s so-called health code system.
But the first of the two VIP trade sources said that the virus test was not a major issue. “The requirement of doing the Covid-19 virus test, comparatively speaking, is not such a big problem because it is widely available in mainland China,” the person said.
Nonetheless, the announcement of the test requirement for entrance to casinos was “sudden” and had come as a surprise to those casino patrons that were already visiting the casinos, that person and another junket employee told GGRAsia.
The first source said: “Basically this new rule sent our few remaining patrons on the gaming floors away.”
The Macau health authorities say they can currently provide Covid-19 testing services for non-locals as well as locals, but daily capacity is limited.
The second junket source said confidence regarding credit issuance to players, was also potentially an inhibiting factor for the VIP sector.
A question that the “whole” VIP sector faced was, “how confident are the VIP gaming operators when issuing credit?” said the source.
“This industry relies a lot on credit. But now probably the [junket] firms will be getting tighter about issuing credit to players, as they are less confident in the macroeconomic” situation in China, the person added.
Sanford Bernstein said in its Monday update that the average daily rate (ADR) of Macau’s casino GGR for July 13 to 19 inclusive was estimated at MOP43 million (US$5.4 million), which would be down 95 percent year-on-year. Aggregate Macau GGR for July 1 to 19 inclusive was approximately MOP800 million, with month-to-date ADR of approximately MOP42 million, the brokerage estimated, citing channel checks.
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