Macau Gaming Could Be Damaged By Hong Kong Isolation

Posted on: January 26, 2022, 11:25h. 

Last updated on: January 26, 2022, 12:48h.

Erik Gibbs Read More
Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

Hong Kong won’t likely reopen its borders completely until 2024. Should this be the case, it could cause a ripple effect that might impact Macau’s casino market.

Hong Kong COVID-19 lockdown
Hong Kong police and health officials work to combat COVID-19. The Chinese SAR has seen a recent spike in positive cases that threatens it, as well as Macau. (Image: The Japan Times)

Hong Kong has implemented new policies in an effort to keep COVID-19 from becoming a bigger threat. This means the city is likely to remain “semi-closed for international travel in the coming 12-36 months,” according to the European Chamber of Commerce.

As a result, if the? (ECC) is correct, a large number of international companies may exit. This might have an impact on the regional economy. It could also cause Macau’s gaming industry to suffer.

Hong Kong, after China, is the largest feeder for the city’s casinos. Even as Macau looks to revamp its international tourist appeal, gambling is still a huge part of the local ecosystem.

Slip in Global Position

Hong Kong asserts that, in 2020, it was the world’s sixth-largest trading entity in goods. For that year, its total merchandise trade market was worth $1.05 billion, 302% of its gross domestic product. Should it see a mass exodus of multinational companies, much of that could be wiped out.

We anticipate an exodus of foreigners, probably the largest that Hong Kong has ever seen, and one of the largest in absolute terms from any city in the region in recent history,” said the European Chamber of Commerce.

Hong Kong could lose its place on the list of one of the most attractive financial hubs as it continues to engage in strict travel measures. The ECC posits that multinational firms could decide to either move to mainland China or to other Asian locations like Seoul or Singapore. The latter would also lead to fewer contributions to the Chinese economy.

COVID-19 Cases on the Rise

Local officials say there has been a steady increase in COVID cases in Hong Kong since Dec. 14, with a major spike after the new year. However, not everyone agrees with this reporting.

The Center for Systems Science and Engineering (CSSE) at Johns Hopkins University indicates that there were five new cases on Dec.14. The center says there have been 77 new cases as of January 25. Local reports say there have been 107 new cases.

Much of that increase has occurred this week. The figure had dropped to seven on January 19 but then began to spike again. Part of this is because of a vaccinated rate of the adult population of only around 70% in the city.

Difficulty Driving Revenue

With the threat of a drawn-out closure in Hong Kong looming, it becomes more difficult for Macau to rely on the SAR for traffic. Plans to allow for quarantine-free travel between the two had to be scrapped recently because of COVID-19, exacerbating the situation.

Macau’s gross gaming revenue in 2021 was 44% better than that of 2020. Analysts expect it to improve again this year, possibly up to as much as $15 billion.

However, not being able to count on as much traffic out of Hong Kong will skew the figure downward.