Macau Casinos’ Investment Payback Period Balloons From a Year to Decades

Sands Macau stands out on the city’s skyline with its gold facade and reflective glass panels — a reminder of the gilded age of the world’s largest gaming hub.

Opened in 2004, the enclave’s first Las Vegas-style casino raked in so much cash from Chinese gamblers that its owner, late mogul Sheldon Adelson, was able to recoup a $256 million construction cost in just under a year.

Those days are gone. Even before the pandemic, new casino resorts were likely to see a payback period of more than five years as they faced challenges from bulging construction costs to China’s crackdown on capital outflow. Covid-19’s hit to visitation has added at least four years to that timeline, based on analyst estimates on when operators can expect to make a full recovery after gaming revenue plunged 80% last year.

The next shoe to drop is likely the shortening of concessions — Macau’s term for gaming licenses — under revisions currently being debated to the territory’s casino law. With authorities having signaled that the current 20-year concession period will be slashed after expiry in June, operators are growingly concerned that building a new casino in Macau will no longer be a good bet.

Source: https://www.bnnbloomberg.ca/macau-casinos-investment-payback-period-balloons-from-a-year-to-decades-1.1682298