All bets are now off over how long the deadly coronavirus outbreak will last. Tuesday’s forced shutdown of Macau’s $40bn casino industry underlines the outbreak’s widening ramifications. The move is the first in the history of the world’s largest gambling centre, apart from brief weather-related closures.
But even before Beijing stopped issuing visas for individual travel to both Hong Kong and Macau this month, revenues have been declining sharply. Over recent quarters, protests in Hong Kong reduced visitor numbers. China’s slowing economy also weighed on earnings. At Wynn Macau, the highest grossing casino in Macau, revenues fell almost a fifth in the third quarter as VIP table games turnover — the total amount gambled by high spenders — declined more than 40 per cent.
Shares prices of casino operators Wynn Macau, SJM Holdings, Sands China and Galaxy Entertainment are down as much as a fifth since evidence of the outbreak’s spread emerged in mid-January. Yet there could be a lot further to fall. The latter’s enterprise value of 14 times ebitda is still a long way from the four times it traded at during the peak of the Sars outbreak.