By Shirley Zhao December 1, 2021

Macau reported worse-than-expected gaming revenue growth in November as the impact of earlier local Covid-19 outbreaks lingered, with the gambling hub now facing further headwinds after last week’s arrest of its biggest junket boss. 

Gross gaming revenue barely changed from the previous year, at 6.7 billion patacas ($834 million), according to the Gaming Inspection and Coordination Bureau, trailing the median analyst estimate for 2% year-on-year growth. 

  • Revenue rose 55% from the previous month, but was still down 70% from the pre-pandemic level in 2019.

Key Insights

  • The world’s largest gaming market heads into December facing growing uncertainties, notably the omicron variant’s potential impact on travel and the arrest of Alvin Chau, chief executive officer of Macau’s biggest junket operator, Suncity Group, which sent the stock of the company’s listed arm — which doesn’t include its junket operation — plummeting.
  • Chau was detained by Macau police for establishing overseas gambling platforms, carrying out illegal virtual betting activities and money laundering. The arrest signals an acceleration in Beijing’s crackdown on capital flight, threatening junkets’ longtime operating model of recruiting high-rolling gamblers from China and extending them credit.
  • Revenue from Macau’s junket-driven VIP market — which accounts for one-third of the enclave’s gaming revenue — could shrink by half in the coming weeks, JPMorgan Chase & Co. analysts including DS Kim wrote in a Nov. 27 note.
  • Adding to the pressure are possible coming changes to travel rules from the mainland and Hong Kong, the top two contributors of arrivals to Macau and the world’s last Covid Zero holdouts. Investors who were thrilled in November by news of potential border easing with Hong Kong could spook if concerns about omicron delay any resumption of travel to Macau.
  • Visitation fell 90% in October — the latest available figure — from pre-pandemic levels in 2019, due to tough travel restrictions imposed by China after the Covid flareups in Macau.
  • Looming overhead, casinos still face more regulatory oversight as Macau officials draft gaming law revisions that could impose greater government control over operations and profit distribution, and have raised questions about Macau’s future as a global gambling hub.

Market Performance

  • The Bloomberg Intelligence index of Macau’s six casino operators fell 5% in November, compared with the benchmark Hang Seng Index, which was down 7%.