Macau casino operators’ debt estimated to have reached $24 billion: Morgan Stanley

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Casino operators in Macau might have to wait a bit longer for their Gross Gaming Revenue (GGR) to rise up to pre-covid 2019 levels. For quite some time, Chinese casino operators have had to be in huge debt just to keep the casinos running due to China’s zero covid policy.

Macau has been experiencing a lot of slowdown in the casino business as the government is discouraging people from going to public places like these gambling hubs as much as possible. 

According to a report from Morgan Stanely, a global brokerage and investment firm, the combined debt of 6 casino operators in China is somewhere around $24 billion, which is nearly five times more than when it started during covid lockdowns. The third quarter alone caused the gaming companies to spend $1.5 billion.

Even after the government approves the license of the six companies, there is a new entry into the casino market in China. Genting Malaysia, a gaming hotel service provider, will also act as a challenge to the Chinese casino operators.

There are many uncertainties, is one of the operators going to lose their Macau license if Genting Malaysia gets one. According to Fitch Ratings, an American credit rating agency, forecast 2022-2024 Macau GGR will be about 27%, 50% and 70% of pre-covid years.

They also concluded that “The possibility of onerous capital commitments also remains a key unknown until the concession tender process is publicly outlined by the government, which could occur in the near term. We have grown less concerned over the risk of potentially weaker operating economics given incremental clarity on enacted changes to the existing gaming law published by the Macau government.”

Casino operators are still hopeful, as, during the “golden week” in October, Macau reported more than 180k visitors despite strict covid restrictions. The daily gross revenue during that week was around $25 million, which was encouraging for casinos.