The biggest gaming hub on the planet, Macau, has been hit pretty hard by the Covid pandemic. Even as the rest of the world returns to business as usual, Macau is still affected by the pandemic. Due to mainland China’s Covid Zero policy, more and more companies that supply casino equipment, such as slot machines or baccarat table systems, are moving out, looking for more favorable markets.
Casino Supplier Leaving Macau
One of those companies, Light & Wonder Inc., a leader in the casino products industry, is moving all of this expatriate staff from Macau to the Philippines. With issues in Macau, the Philippines are rapidly emerging as the new top gaming market in Asia with many businesses moving their offices there.
In addition to Light & Wonder, another casino equipment supplier from Japan is also relocating its business operations to the Philippines and Singapore. The source of the information has not named the company in question. Still, the Japanese company has already moved more than 30% of its staff from Macau and relocated more than half of its inventory. According to people in the know, the main reason for this is the rising number of issues and challenges with supply chain functioning in Macau. The company, like many others, has seen a sharp decline in its business in Macau, with revenue down by as much as 90% as casinos delay their orders due to market uncertainty.
Macao Gaming Equipment Manufacturers Association
The chairman of the Macao Gaming Equipment Manufacturers Association, Jay Chun, said that he knows of at least 4 international casino equipment suppliers who are in the middle of relocating their resources away from Macau.
Per regulations, Macau casinos will get their licenses renewed at the end of the year. Because of that, most of them are shelving their purchasing plans and not buying any new equipment. On the other hand, this is damaging to the suppliers such as Lights & Wonder.
Macau No Longer Biggest Gambling Market in the World
Macau has been dominating the world of gambling for over a decade, with a market bigger even than Vegas. However, with strict Covid lockdowns and restrictions, along with China travel bans, the crown seems to be moving back to Nevada. The majority of Macau customers come from mainland China, and with the market that huge, six times bigger than Vegas, the revenue was around $36 billion annually.
According to the company’s vice president and managing director for Asia, Ken Jolly, the situation is having a significantly negative effect on their revenue. With the Philippine market assuming the dominant position in Asia, it simply makes sense to relocate there. The trend is likely to continue and even accelerate as the Chinese Government introduces a new casino law. Starting in 2023, there will be a cap of 12,000 gaming machines across the whole city. For comparison, in 2019, Macau had 19,000 gambling machines. The new law is part of mainland China’s efforts to fight corruption, money laundering, and capital flight.
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Macau Gambling Revenue
As a result, in August, the Macau gambling revenue was $271 million. That’s a mere 9% of the pre-pandemic levels. At the same time, gambling markets in Singapore, the Philippines, and South Korea are recovering much faster and are already at more than 70% of the pre-pandemic revenue.