Good Morning. Macau’s casinos have been ordered to close for the second time in two-and-a-half years as the government seeks to stamp out the spread of Covid. Initially for a week from Monday 11th, most observers expect the mandate to be continued for another seven days. The silver lining, according to Ben Lee of IGamiX Management & Consulting is that the shutdown may not be the worst thing for the operators as they battle to contain cash burn in a zero-revenue environment. The operators are not obliged to pay staff during the period, with employee costs as a percentage of operating expenditure the highest in the region.
What you need to know
- Forecasts for Macau’s GGR have been cut to the mid-twenties percent level of where they were in 2019 by analysts at Morningstar, due to zero-Covid.
- Only 20 out of the more than 200 casinos that were licensed in Cambodia in 2021 have reopened for business, with tax revenue a fraction of budget.
- Universal Entertainment to delay publishing its 2Q22 results due to its inability to access information about the operator of Okada Manila.
- US listed operators and Macau current concessionaires, MGM Resorts, Wynn Resorts, and LVS unanimously argued that Macau will quickly recover once the lockdown is lifted.
On the radar
- Queensland clubs and hotel gaming revenue up 17.3% in June.
- Asia accounted for 20 percent of alerts reported by IBIA in 2Q22.
- IPI expects accord with regulator on re-opening by end of July.
AGB Intelligence
ON THE GROUND
Macau casino closures provide some relief from cash burn
The week-long closure of Macau’s casinos could provide some relief from the daily cash burn of the six operators, who are not obligated to pay their staff during the government-mandated shutdown, says Ben Lee, managing partner of IGamiX Management & Consulting. The government ordered the casinos to be closed from Monday 11th of June as it continues to battle the worst outbreak of the pandemic so far. “The closure is better for the operators as they don’t have to pay their staff salaries,” Lee said. “They also don’t have to pay for staff meals and the cooks who come in to cater.” Staffing costs would typically be about 25 – 35 percent of operating expenditure in Macau, not including gaming tax and commissions.
Industry Updates
- MGM signs accord with MLB Players for Japan, China, U.S.
- Aristocrat names new CMO and Chief Supply Chain Officer.
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