Macau: The world’s gambling hub tumbles over China’s anti-corruption campaign and zero-COVID policy

August 17, 2022 Macau Casino & Hotel Industry Updates

Macau, once the world’s biggest gambling hub, announced another round of full population COVID-19 PCR tests after a single positive case was detected in its neighboring city Zhuhai on August 8. Similar city-wide testing has become and will continue to be a regular practice as the city needs to follow the mainland Chinese zero-COVID strategy in order to maintain quarantine-free travel to mainland China, in particular its neighbor city Zhuhai in the Guangdong province.

The zero-COVID strategy thus far has been very successful in protecting Macau from the virus. As of August 12, the city of nearly 670,000 people has only had 791 total infections and six deaths since the pandemic broke out in early 2020. Yet, the achievement comes with a price — the former Portuguese colony has lost its crown in the world’s gambling industry.

After the handover of sovereignty back to China in December 1999, Macau laid out its development plan to become Asia’s top tourism, gaming, conventions, and exhibition destination by opening gaming licenses to foreign operators.

Currently, the six operators are: Wynn Macau, Sands China, MGM Macau, SJM Holdings, Galaxy Entertainment and Melco Resorts. The parent companies of the first three are from Las Vegas, USA while the other three are based locally in Macau and Hong Kong.

These operators are working with a large network of junkets to draw in gaming tourists from mainland China where gambling is illegal. Macau surpassed Las Vegas in gross gaming revenue in 2007. In 2019, before the outbreak of COVID-19, Macau’s gaming revenue exceeded USD 29 billion, while Las Vegas, its biggest competitor, drew only USD 6.6 billion in revenue.

Mass city-wide testing and soft lockdowns
The global gaming industry was seriously debilitated by the COVID-19 pandemic in 2020 due to travel restrictions and lockdowns. Macau had a 79 percent drop in gaming revenue to US 7.57 billion in the same year.

In 2021, Macau’s gaming business was mainly supported by mainland Chinese tourists who could travel to the city with no quarantine restrictions. The annual revenue reached USD 10.82 billion — still higher than Vegas’s normal annual haul.

Yet, as Omicron variants hit Macau and mainland China in 2022, the casino city finally felt the pinch and lost its crown.

Under China’s zero-COVID protocol, Macau banned all foreign visitors from March 18, 2022, to prevent Omicron from entering the city. However, the COVID-19 variants soon emerged in many Chinese cities, including Shanghai, Shenzhen, and Zhuhai, leading to a drop in the number of mainland Chinese visitors to Macau.

Worse still, on June 19, 2022, an outbreak of the B.A 5 Omicron sub-variant was identified in Macau, leading officials to suspend quarantine-free travel between Macau and mainland China. Officials tried to curb the outbreak by mandating rounds of PCR tests and issuing a soft city-wide lockdown, requiring non-essential businesses, including over 30 casinos, to shut down for a week on July 11. The closure came at a huge price, and ultimately, officials were unable to successfully curb the outbreak.