Bad Luck Hits Macau Casinos With 15-Day Coronavirus Shutdown -- Update

By Joyu Wang and Jing Yang 

MACAU -- Casinos in the world's richest gambling market were already down on their luck when city officials ordered them on Tuesday to close their doors at midnight for 15 days to help curb the spread of the coronavirus that has killed hundreds of people in China.

There were more staff than punters inside the red- and gold-carpeted floor of Sands casino here on Tuesday afternoon as Macau Chief Executive Ho Iat-seng discussed the unprecedented two-week shutdown with casino operators including Wynn Resorts Ltd. and Sheldon Adelson's Las Vegas Sands Corp.

Macau has been a cash cow for the Las Vegas giants and other casino players for almost two decades, generating more than five times the revenue of Las Vegas in 2018. But in January, as the coronavirus outbreak erupted in Wuhan and began to spread across China, Macau's gross gambling revenues dropped, falling 11.3% year-over-year to $2.76 billion, according to Macau's Gaming Inspection and Coordination Bureau.

This was fueled partly by a collapse in visitors during the Lunar New Year holiday, which this year began on Jan. 25. The number of mainland Chinese tourists plunged more than 80% during the weeklong holiday, while Macau's overall visitor tally dropped 78%.

Gross gambling revenue could decline 65% year-over-year in February if Macau's casinos closed for two weeks, Jefferies analysts Andrew Lee and Lois Zhou said Tuesday.

Takings had already begun to slip late last year, falling in the last three months of 2019 versus the same period a year earlier.

Gambling and entertainment is the lifeblood of the former Portuguese colony and Macau's gambling tables are rarely without players. The city closed its casinos for 33 hours due to a powerful typhoon in September 2018.

"It's a very difficult decision, but one we have to make for the sake of the health of Macau citizens," said Mr. Ho, who was recently appointed chief executive, the top official in the semiautonomous Chinese city.

A total of 41 gambling and entertainment venues would be shut, including casinos, bars, theaters and clubs, Secretary for Economy and Finance Lei Wai Nong said.

Macau has recorded 10 cases of people infected with the viral pneumonia. The two most recent cases were people who work for casino groups. As of midnight on Monday, mainland China had 20,438 cases, with 425 deaths, according to the National Health Commission.

Shares in the casino giants' Hong Kong-listed units have fallen sharply since mid-January and some of the declines came after Mr. Ho first said a shutdown may become necessary.

Shares dropped further on Tuesday, taking the year-to-date declines for MGM China Holdings Ltd. and Wynn Macau Ltd. to 16% and 14% respectively, according to data from Refinitiv. Shares in Sands China Ltd., which is part-owned by Las Vegas Sands, have fallen 11%.

In downtown Macau, where a cluster of casino resorts and luxury hotels located, some stores were closed and normally crowded streets had few pedestrians.

At the usually bustling Sands casino, more than half of the baccarat tables were unused and only a few gamblers played in silence at others. A dozen dealers in surgical masks and suited uniforms sat at other empty tables, looking bored. Some sorted poker chips.

Visitors had their temperature checked before entering and were instructed to wear a face mask. Fewer than a dozen people stood in line for free shuttle buses outside.

Sands China's Venetian Macao said its hotel would remain open but some restaurants would close for the next two weeks, a person handling reservations said.

A Wynn Macau reservations employee said it would close its casino and poker room and suspend the hotel buffet. Wynn supported the move as people's health was the priority, a company spokeswoman said.

Luo Guogong, who works at a restaurant near the Sands casino, said the ban would affect his livelihood.

"My boss already told me, once the casino is shut, our restaurant would be forced to close as well," Mr. Luo said. Mr. Luo has worked in Macau for about a decade and lives in neighboring Zhuhai, one of thousands of people who trek daily across the mainland Chinese border to work in the gambling center.

"We are in an unusual time, and nobody wants to see this," he said.

Paul Tse, chairman of the American Chamber of Commerce in Macau, said the casino closures would encourage gambling companies to not have their employees come to work from Zhuhai.

"The government's intention is quite clear: reduce the number of people transiting from the various border checkpoints," Mr. Tse said.

Casino operators can weather the suspension provided that it is temporary, said Angela Han Lee, an analyst at China Renaissance Securities (Hong Kong) Ltd. She said most of their costs were variable and so wouldn't be incurred during a suspension, meaning they could report positive earnings before interest, tax, depreciation and amortization even if gambling revenue drops 60%.

--Frances Yoon contributed to this article.

Write to Joyu Wang at [e-mail] and Jing Yang at [e-mail]

(END) Dow Jones Newswires

February 04, 2020 11:10 ET (16:10 GMT)

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