Macau, the world’s biggest gambling center, has been badly hit by declining casino income in wake of the recent surge in the pandemic, resulting in the closing of hundreds of firms and causing the highest unemployment rate since 2009.

A week after the Macau government warned that rising job losses and financial strains could trigger social conflicts and destabilize the city’s security, the former Portuguese colony reported on Wednesday one of its worst monthly gambling revenues since September 2020.

The only place in China where gambling is legal is the Chinese special administrative region. More than 80% of Macau’s government revenue comes from casino taxes, making it difficult for the city to diversify.

“We are the world’s most dependent tourist destination. Even though there were no other industries to fall back on, we had no choice “As an associate professor at the University of Macau, Glenn McCartney opined:

“In light of the fact that it has taken us more than two decades to broaden our horizons. It isn’t going to happen today or even in the next few days for that matter. There is no quick fix.”

Because of travel restrictions imposed by the coronavirus pandemic, Macau’s reliance on gambling dropped by more than 80% in the first quarter of 2019 compared to the same period in 2018.

More than 90% of visitors to Macau are from China’s mainland, which maintains a “zero-COVID” policy toward the special administrative region.

A 68 percent drop in May gambling revenues to 3.3 billion patacas ($400 million) is still a long way from the 26 billion patacas hit in May 2019 despite an increase of 25 percent from April.

Casinos in Macau are losing money daily and piling up debt as liquidity continues to evaporate.

Increased restrictions on capital flight and a crackdown on the shadowy junket industry that brings in high rollers from China have hurt the country’s gambling industry.

Cost-cutting and increasing economic losses are visible throughout the small territory with over 600,000 residents, extending to retail, industrial and commercial services.

According to the most recent government statistics, the local unemployment rate has risen from 1.8 percent in 2019 to 4.5 percent.

The Emperor Entertainment Hotel announced in April that it would close its casino on June 26, citing a difficult business environment and gloomy outlook for the high-end gaming segment.

At least seven other casinos are expected to close by the middle of the year, according to local media.

Businesses in Macau are expected to face a “poor” business climate for the next three months, according to the Macau Economic Association.

According to an IMF report released in April, Macau’s economy will take several years to recover from the pandemic, with the sharp contraction in activity highlighting the city’s vulnerabilities.

Casinos in Macau, which employ tens of thousands of locals, have been urged not to lay off any employees by the government. A few operators have chosen not to renew contracts or to offer unpaid leave or share bonuses instead of full salaries.

There are fewer gamblers in Macau as VIP parlours and some casinos have closed, according to Cloee Chan, a labour activist in Macau.

As a result, “many gaming industry workers are either underrepresented or fired,” she said.

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