While the pandemic is yet to reside and Russia’s invasion of Ukraine is ongoing, chances of a global recession are far from slim. The hospitality and entertainment industries are the ones that may feel the impact of a possible recession. However, a new report suggests that a global recession may have a minor impact on the gambling industry in Macau.
Report Unveils How Global Recession May Impact the Gambling Industry
Brokerage Sanford C. Bernstein Ltd, released a new report Wednesday that estimates what would be the impact of the global recession on the gaming industry in Macau. Details of the report were released today by GGR Asia. According to the white paper, although the gaming industry may be impacted to some extent, it is “better positioned to hedge a recession risk.”
“Macau revenue has been about as low as it can go as a result of travel restrictions stemming from COVID, and any impact on Macau from an economic slowdown in China would be minimal in light of the recovery to be driven by opening the borders,”
reads the recent report released by Sanford C. Bernstein Ltd.
The recent white paper acknowledges the decline in revenue for operators in Macau. Primarily, that decline was driven due to COVID-related traveling restrictions, reveals the report. When it comes to junkets, the report outlined that their disappearance helped reposition the industry better for “future economic cycles.”
Late last year, Macau started the crackdown on junket operators. A landmark moment was the arrest of Suncity’s boss, Alvin Chau, over allegations of cross-border gambling. With that in mind, operators quickly adjusted after severing ties with junkets and focusing on the VIP segment. In that line of thought, the report pointed out that there’s “limited room for VIP revenue to decline further.” However, despite the decline in revenue, the white paper predicted the recovery of the gambling industry after COVID-related restrictions are lifted and tourism returns to its usual levels. Additionally, that recovery would be boosted by the mass segment, explains the report.
The Industry in the US May See GGR Decline
Although the report predicts a minor impact on Macau’s gaming industry, this is not the case for the operators in the US. In the event of a global recession, analysts Vitaly Umansky, Shirley Yang and Louis Li claim that the industry in the US may see a decline between 3% and 11% in terms of gross gaming revenue (GGR).
On the bright side, the white paper predicts that the effect of a recession on US gaming operators may be offset by the non-gaming revenue. Last but not least, the report outlined that the gambling industry went through restructuring which puts it in a better position when compared to other recessions.
