(Bloomberg) -- Macau, the world’s biggest gambling hub, is predicting a record drop in gaming revenue this year as casinos in the semi-autonomous Chinese territory deal with the disruption caused by the coronavirus pandemic.
The enclave’s government cut its 2020 forecast for gross gaming revenue to 130 billion patacas ($16 billion), half the initial projection of 260 billion patacas, according to a statement dated March 19.
That represents a 56% decline from 2019, the steepest slide ever, compared with the median estimate for a 19% dip in a Bloomberg survey of analysts last month.
The revision to the outlook follows a decision by the local administration to suspend casino operations starting Feb. 5 for about two weeks in a bid to contain the spread of the disease now known as Covid-19. As China imposed draconian measures to contain the health crisis, the gambling mecca has also seen visitors dwindling as people stayed away for their own safety.
The pandemic, which has infected over 234,000 people worldwide and killed more than 9,800, has dealt a severe blow to the Macau casinos that were already struggling to recover from a revenue decline last year. Operators including Las Vegas Sands Corp., MGM Resorts International and Wynn Resorts (NASDAQ:WYNN) Ltd. rely on the enclave for a bulk of their revenue.
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With the virus spreading to other countries, regulators and government officials across the U.S. have ordered casinos to close there as well, adding to the woes of the companies. The epicenter of Covid-19 has now shifted to Europe, which has surpassed China in the number of infections and fatalities.
In Macau, even after the facilities reopened, gaming floors have seen little rebound as China continued to halt individual and group visas to Macau in a protracted fight against the contagion. Macau has barred non-residents outside China from entering the city from March 18.
U.S.-listed operators with “mostly Macau exposure” have the strongest liquidity position and should recover faster as that region should be up and running the soonest, according to Nomura Instinet gaming analyst Harry Curtis. China’s new domestic cases of the coronavirus have fallen to zero after a two-month battle and the country is now trying to restart its economy.
Macau will use 39 billion patacas of reserves to fill its budget deficit caused by the anticipated reduction in gaming tax income and increased expenses, according to the statement.
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