The current health crisis has been sweeping the world from China for several months now. We are inundated with information, both useful and unnecessary or even fake news. Many reputable magazines provide only half information. For example, they report how many people in total have been infected. However, that at least half of them have already been declared cured is not mentioned.
We therefore keep far from information about the virus that is now called SARS-CoV-2. But we are of course interested in the implications for online and brick-and-mortar casinos , and of course the consequences for the gambling world in general. So we cannot escape it completely.
Crisis situation and Chinese casinos
Casinos in China have obviously suffered the most under the emergency measures. They are still suffering, but the virus now seems to be on the wane.
Gambling is only allowed in Macau in China, and gambling is popular among Chinese. At the height of the current crisis, Macau casinos closed for 15 days. Thursday, February 20, 26 of the 41 casinos reopened. Unfortunately, the casinos did not immediately fill the public.
The Macau Gaming Supervision and Coordination Bureau regularly reports on the declining turnover. They report that in November 2019, total sales in Macau, compared to November 2018, decreased by about 2 billion patacas. That is approximately $ 200 million or 8.5% of sales in November 2018. In December 2019, sales were 13.7% lower than in December 2018.
After the casino shutdown for two weeks in February, gambling turnover in gambling capital Macau was even 88% less that month than a year earlier. In other words, sales were at 14% from February 2019, or 3.1 billion pacatas (also known as MOP $).
Are the numbers correct?
Figures seem hard and do not lie. It is pitiful, moreover, to blame for the downturns on the crisis. The huge drop in sales in February is of course due to the casino closure, the reopening of only part of the casinos, the closure of cities and the panic surrounding the virus.
But with the aforementioned declines, we must also include other information. Back in 2019, casinos in Macau were experiencing declines in revenue. While the problem was first officially discovered in Wuhan, a city about 1000 km from Macau as the crow flies, in December 2019.
Each month of 2019 showed a decrease compared to 2018. In April and August the decrease was 8.5%; the same high as the decrease mentioned above for November… one month before the outbreak. The decline that has already started did not suddenly stop in December. Roughly reasoning, you could say that the revenue impact of the lockdown in December 2019 is about 5.2% (13.7 minus the monthly decline of about 8.5). to be
There is more to it
It is clear that this decrease in 2019 is independent of the outbreak itself. Why then did the decline in the turnover of casinos come about in Macau, a region with an area the size of the town of Culemborg ? The government doesn’t know (yet). What they do know, or are actually doing, is to encourage gambling in Macau.
They have been doing that for a few years. Especially because they find it annoying that the wealthy Chinese gamblers left for Las Vegas with their money . The government is trying to keep those Chinese in their own country through promotions.
Can you manage that? That cannot be answered just like that. Various casinos in Las Vegas have responded to developments in the market and in the world in recent years. That resulted in fluctuating sales. There was a decline in turnover in particular in the past year, but that did not necessarily mean that profits fell. For example, they implemented sustainable measures, such as the use of LED lamps, installation of solar panels, etc. As a result, costs decreased.
However, we only look at it here from China and the outbreak there. Chinese tourists, aggregated into Asians in some reports, made up about 6% of Las Vegas gamblers for a long time. That has already fallen by half in recent years.
However, not all Chinese tourists come from China. Many have lived in America for years, especially California. Even the trade boycott with China has no effect on them. That the boycott also left its mark in Las Vegas is, according to some research agencies, very clear.
Crisis in Las Vegas
What is the impact of the crisis situation on Las Vegas? The only answer is that more people are walking the streets of Las Vegas wearing face masks. It is more difficult to see the slight decrease in Chinese visitors. This happened in particular after the government limited air traffic to and from China due to the crisis that had arisen a few weeks ago.
Multiple US casinos, not just Las Vegas, report seeing a decline in revenue during the two weeks that Macau casinos were closed. You could see a connection there, albeit strange. However, it is too early to assess the overall impact of the outbreak on the gambling industry, and Las Vegas, according to business analysts in America. Because there are too many other factors that influence.
At most, you can reason the possible influence of the outbreak. Such as that gamblers stay at home because they do not want to run a risk of infection. Further restrictions on air traffic, also to and from other countries, will also have an effect. Especially since an important part of the turnover in Las Vegas comes from international premium customers, the so-called high rollers .
Fall in value of shares
The only thing where the outbreak is clearly affecting Wall Street. Due to the unfounded panic among investors, several gambling organizations saw their shares there fall sharply in value. The value of MGM Resorts even declined by 21% in the past month. But this casino juggernaut with stakes in Macau also suffered a data hack in addition to the outbreak.
Most of the major US gambling organizations also have interests in Macau. The activities there are often independently organized in holdings with shares on the Chinese stock exchange. Fall in value of casinos on that casino exchange would make sense. Still, declines in value and investor emotions do not differ much between Wall Street and the Chinese stock markets.
China and online gambling
Furthermore, there is not much more to report from the American gambling city. They have taken measures against the virus that are similar to the advice of the RIVM (wash hands, do not shake hands, stay at home if you have a cold, etc.).
We are going back to China. There, the government will scratch the head that it does not allow online casinos in the country. After all, all those people sitting at home could easily have engaged in online gambling and thus filling the Chinese treasury.
Video gaming during lockdown
Failing that, the quarantined Chinese have started video gaming online en masse. Some games saw their millions of audiences double. In January this already caused problems with the server capacity. The producer of the popular World of Warcraft had to apologize in February. Due to the huge increase in players, the waiting times had become unacceptable.
Other popular games experience the same problems. But there are also producers who see opportunities to win over new players. They offer free promotions, give temporary in-game extras or place free games on their gaming platform.
Interests in proportion
The largest gambling center in the world (3x as much turnover as Las Vegas) is recovering after a two-week shutdown. But on March 3, Macau had 10 infected residents. According to analysts, Macau runs a certain risk with this. After all, Macau is located in China, the epicenter of the outbreak, and it is the only city where gambling is allowed. And it is also an interesting source of income for the government.
Compare that to Las Vegas. It is a major gambling center, but not the only one. Many Las Vegas casinos are owned by large organizations that also have casinos elsewhere. A temporary outage in Las Vegas has only a limited impact on the organizations concerned and the US gambling tax income. In addition, there are hardly any infected persons in the United States.
Increasing number and scattered
However, in early February, the CDC (Centers for Disease Control and Prevention) reported the first US patients with infection. This gradually rose to 90 cases on March 2 and 164 a few days later. Most of the infections are, at the time of this writing, in the states of Washington and California. Other states have none or some.
Las Vegas at the southern tip of Nevada is close to the California border. The municipality is concerned. With the specter of Macau in mind, she looks at developments and advises casinos. She wants to prevent panic that keeps people away. On the other hand, she realizes that people can easily infect each other in the packed casinos and theaters. In addition, a potentially infected person from out of town can enter unnoticed.
That person could also be an employee who carries the virus. That happened at the Wildhorse Resort and Casino on a reservation in Salem, Oregon. The employee, who worked in the office and had no contact with gamblers, was soon identified as a patient. But that could not prevent more than 3000 people from having to be quarantined at home as a precaution. And that the reservation was closed and the casino closed.
The coverage of the outbreak consists mainly of describing isolated stories. Like the one above about the casino employee. A line can hardly be discovered and there are many uncertainties. For example, how many people are at home under the assumption that they have the flu, but nothing has been diagnosed with them. In all uncertainty, governments are turning to draconian measures. Only afterwards can it be determined whether those measures were indeed too strict.
It goes without saying that they cause economic damage to casinos and others. Businesses cannot make money at football matches without an audience, empty theaters, closed casinos, canceled flights and other things.
Furthermore, most serve their own interests. Investment advisers point to the rapid recovery of the stock markets after previous virus outbreaks; in other words: keep investing and don’t get scared. Doomsayers, on the other hand, predict that this outbreak is the announcement of a much more dangerous future virus. They do want to frighten you, in other words: join us and proclaim ‘the word of God’, ‘F * ck the system’ or whatever other purpose the doom thinker stands for.