Almost all bets are off as casino capitals Macau, Las Vegas are slammed by virus

Hong Kong

THE vast, glitzy gaming halls of Macau are open, but thousands of baccarat tables are empty. The world's biggest gambling hub has barred entry to most travellers and hotels are being used to isolate new arrivals in case they have been infected by the novel coronavirus.

In Las Vegas, the casinos have been forced to close in order to prevent the spread of the disease. The same has happened in Australia, South Korea, the Philippines and Cambodia. The global business of gambling - which thrives on air travel and large groups of people in close proximity - is one of the hardest hit as the world goes into lockdown.

The S&P 500 casinos and gaming index has lost 51 per cent this year, more than double the 24 per cent dip in the S&P 500.

Macau's gaming revenue fell 80 per cent in March from the year before, according to government figures. It fell 88 per cent in February when authorities suspended casino operation for two weeks. Analysts expect April's numbers to show an even sharper drop. The special administrative region of China, gets more than 80 per cent of tax revenues from the gaming industry, which employs about three quarters of the territory's 600,000 population, either directly or indirectly. Macau's government said last week it was "ready for the worst" and pledged to support small businesses and workers financially. It is effectively leaving casino operators - which have reaped huge profits over the past two decades of rapid growth - to deal with the dip in business themselves.

Macau leader Ho Iat Seng last week criticised the casinos for not initially cooperating with a government plan to use their hotels as quarantine facilities, although some have relented. Macau's government has forced operators to safeguard the livelihoods of gaming workers, ordering one company last month to rehire over 200 staff it had laid off due to the drop in business caused by Covid-19. Following that incident, Macau's gaming regulator sent notices to all casinos warning them to maintain employment of their local staff, it said in an e-mail to Reuters.

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That puts additional pressure on Macau's casino operators - Sands China, Wynn Macau, Galaxy Entertainment Group, Melco Resorts & Entertainment, SJM Holdings and MGM China - as uncertainty looms over what the government will do ahead of the expiration of their operating licences in 2022. They are already feeling financial pain, spending between US$1.5 million and US$4 million each day just to stay open, according to analysts, as revenues approach zero. Bigger operators like Sands and Galaxy would normally rake in US$25 million in revenue a day.

Given the government's support, workers are not panicking about losing their jobs, at least yet. Casino workers' primary concern is being infected. Macau's government has reported 41 cases of coronavirus but no deaths.

In the United States, Nevada forced all casinos to close in mid-March, prompting mass layoffs. The state's casinos - alongside most other US companies - are eligible to tap a US$454 billion financial assistance package for impacted businesses included in the US government's US$2 trillion relief plan passed by Congress last week, according to the American Gaming Association. How much that will help companies like Las Vegas Sands Corp, Wynn Resorts Ltd and MGM Resorts International is hard to tell.

The Nevada Resort Association said the situation was not sustainable and the state's unemployment rate could hit 30 per cent, with 320,000 employees relying on US$1.3 billion in wages and salary per month at immediate risk.

In South Korea, shuttered casinos have put thousands of employees on temporary leave, while Australia's Star Entertainment Group said it was laying off 90 per cent of its 9,000 or so employees. REUTERS