There’s a story about an old fisherman in Fujan who gave a poor young girl a ride in his boat so she could visit her ailing mother.
Along the way, they ran into a terrible storm. The young girl took the helm, guided the boat to safety, and later revealed herself to A-Ma, a goddess of the sea. The local fisherman promptly built a temple in her honor.
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When Portuguese sailors arrived at A-ma-gao, or the Port of A-Ma in the 16th century, they wound up calling the place Macau.
That small town has gone through many changes over the centuries and these days is the world's largest gambling market. It has been described by some as "the Las Vegas of the East," although Macau surpassed Sin City's total gambling revenue in 2006.
Like every other tourist destination, Macau, a special administrative region of China, was hit hard by the covid-19 pandemic. Macau underwent a citywide lockdown in summer 2022 to combat rising coronavirus cases.
In September, casino operators saw their shares surge when Macau officials agreed to allow tour groups from mainland China for the first time in nearly three years.
And then in December, China finally and abruptly ended its ultra-strict, zero-covid policy, and almost all the border restrictions were abolished on Jan. 8.
This has been good news for the city's economy. First-quarter gambling tax revenue surged nearly 16% from a year earlier to $1.25 billion, according to World Casino Directory.
Image source: Shutterstock.
Macau Casinos Recover From Covid
In addition, first-quarter gross gambling revenue -- the difference between the money players wager minus the amount that they win -- nearly doubled (up 95%) from a year earlier to $4.29 billion.
Macau featured prominently in MGM Resorts International's (MGM) first-quarter results, which beat analysts' expectations.
"Our operating results certainly benefited from a recovery at MGM China as Macau reopened and our team executed on that reopening plan," Chief Financial Officer Jonathan Halkyard said during a May 1 call with analysts, according to a transcript.
Hubert Wang, president and chief operating officer of MGM China, said inbound daily visitor count averaged about 50% in the first quarter, and April is already at 75% of the 2019 level.
"So, if you walk around the street, you can already see the pre-covid hustle and bustle and atmosphere has reemerged in Macau, into our resorts and the streets," he said, "We think that the market will continue to recover as more and more gaming customers and leisure travelers make their first post-pandemic trip to Macau."
Several analysts raised their price targets for MGM, with Truist noting the company’s strong first quarter, reflecting expectations of a favorable Las Vegas Strip event calendar, strong regional data, and a "sizable momentum" in Macau.
April saw Macau’s gambling revenue climb 450% to a three-year high of $1.8 billion as Chinese tourists returned to the gambling hub, Bloomberg reported.
The result was better than the median analyst estimate of a 393% year-on-year increase and w s the highest monthly take since January 2020. It was still more than a third below the 2019 level.
Bloomberg correspondent Shirley Zhao said in a May 2 broadcast that the revenue boom was “mainly driven by the pent-up demand among Chinese tourists after China reopened."
Macau Faces a Problem From China
Revenue also got a lift and it was also boosted by China's Labor Day holiday, which runs from April 29 to May 3, and "is like a golden week and... traditionally a peak travel season."
Zhao said the sustainability of the pent-up demand is a big question.
"Some analysts expect that in the second half of the year, growth may flatten because the pent-up demand would normalize," she said. "And China will also add more international flights, giving Chinese people more options to travel overseas to places like Japan or Europe where currency is quite cheap at the moment."
Zhao also said that Macau is facing some long-term risks, such as China's crackdown on high-rolling gamblers.
Authorities last year revised the city's gambling law and introduced stricter regulations on junket operators, the middlemen who bring high rollers to casinos, Nikkei Asia reported.
High-spending VIP gamblers contributed nearly 50% of total gambling revenue in the pre-covid days, but industry insiders say the crackdown has annihilated the high-roller business.
Zhang said Macau's focus will be on the mass market, and she cited MGM Resorts' first-quarter results as one of several positive signs for the mass-market recovery.
"If this continues, then Macau is on track to a very good recovery," she said.
