Macao gambled on a costly casino shutdown. Yet it may emerge a winner from coronavirus.


But no Michelin-starred restaurants were open on a recent visit. Nor were the pastry shops known for Portuguese egg tarts. Luxury stores at several casino resorts The Washington Post visited were shut, too. At the few open shops, bored staff members watched movies on their phones, slept or paced aimlessly. A saleswoman at a Cartier outlet in the Las Vegas Sands-owned Venetian resort said the store had sold nothing in a week. Elsewhere in the complex, empty gondolas were fastened to railings (opera music, however, was still playing).

Macao — the world’s largest gambling market, with seven times the revenue of the Las Vegas Strip — was brought to a standstill when its government shuttered the casinos Feb. 5 to curb the spread of the novel coronavirus emanating from China’s Hubei province. As residents heeded warnings to stay indoors, Macao’s streets — usually thronged with tourists, especially from mainland China — turned into a post-apocalyptic tableau.

The two-week shutdown, which seems likely to be extended, is unprecedented. Since its handover from Portugal to China in 1999, Macao has been the only Chinese territory where gambling is allowed. The casinos transformed the fortunes of the city of 670,000, whose tourism sector now accounts for 80 percent of economic output and whose 41 casinos employ about one-fifth of the workforce.

“My parents told me this is what Macao looked like before China opened up, when it was quiet and no one was here,” said 30-year-old Teng Fong Mei, who was operating an egg waffle cart that has been the family’s business for four decades. Sales have dropped more than 80 percent, she said, as she flipped iron griddles filled with dough.

At an ice-cream store specializing in durian flavors, Leung Yun Tsz, who has been serving the treats for 20 years, said turnover was less than 1 percent of usual for this time of year.

Yet the Macao government’s order to shut the casinos has been largely praised as prudent and responsible by casino operators, eager to protect their lucrative relationship with the territory, and by residents who lauded authorities’ swift action despite the economic losses. Macao has 10 confirmed coronavirus cases, a figure unchanged in several days.

Forty miles away, authorities in Hong Kong face dissatisfaction over their handling of the epidemic. The financial center of 7.4 million has reported one death among 56 confirmed coronavirus cases. But public anger has focused on the tone of officials’ response, particularly their refusal to close the border with mainland China and unwillingness to take steps that might disrupt business. Shortages of protective goods have compounded residents’ frustration.

While Macao also has not completely closed its border with mainland China, the casino shutdown eliminated the incentive for most to visit.

“The Macao government reacted promptly to the epidemic, and the way they handled it is worthy of praise,” said Gary Tse, a VIP casino host in his 20s, who has been on leave since the casinos closed. His income has taken a heavy hit, he said, yet he thinks the trade-off was needed.

“Casinos are the economic lifeline of Macao, so to make this decision shows that the government prioritized citizens’ health over the economy and put people first,” he said.

Macao has maintained a steady supply of surgical masks and hand sanitizer, which have become difficult to find in Hong Kong. Macao’s government, led by newly installed chief executive Ho Iat-seng, introduced a system that allows most residents to buy 10 masks every 10 days at a fixed price, to prevent gouging and hoarding. On Wednesday, one million masks were sold through this program, local media reported.

Macao announced more relief measures this week, including tax refunds, additional allowances for disadvantaged families, utility subsidies and health-care vouchers. To boost consumption, the government is issuing spending coupons valued at nearly $400.

Hong Kong, meanwhile, is still facing shortages of masks and even toilet paper, as anxiety and mistrust in the government drive panic buying. The Hong Kong government has promised to source more widely for protective items.

Sonny Lo, a veteran commentator on the politics of both territories, said the gambling hub is more trusted by Beijing, which views Macao as more patriotic. Hong Kong, by contrast, has been rocked by massive protests against China’s increasing encroachment on the territory’s affairs, with millions clamoring for democracy.

Lo adds, however, that Beijing has given provinces and territories autonomy to deal with the crisis as they see fit and says Macao is simply better at adapting.

“The main difference between Hong Kong and Macao isn’t the question of authority, it is more the question of how the Hong Kong government assesses how to deal with crises,” Lo said. “Unfortunately, there has been little attempt by the Hong Kong authorities” to learn from previous emergencies, he added.

Still, business worries are heightened in Macao, whose economy is far less diversified than Hong Kong’s. Experts have warned for years that Macao must curb its reliance on casino revenue and Chinese tourists. Further, even if the casinos reopen later this month, much of mainland China will continue to be locked down by local officials, so recovery could take months.

“If the city does not explore and develop other industries, the economy cannot be sustained,” said Wing Chan, a university student in Macao.

Matthew Maddox, the chief executive of Wynn Resorts Ltd., said on an earnings call this month that the closures are costing the company’s two Macao resorts roughly $2.5 million a day, without accounting for the revenue they would normally make. The resorts made about $4 million a day between Dec. 23 and Jan. 10, before the coronavirus outbreak reached crisis levels.

Colin Mansfield, director of financial operations at Fitch Ratings, estimates a $1.5 billion loss in gaming revenue alone from the casino closure.

Nonetheless, casino operators — particularly foreign ones such as Las Vegas Sands and Wynn, which rely heavily on Macao — have praised the government’s actions. Sands, through its Chinese subsidiary, has donated 500,000 masks to the Macao government, while others are donating money for research and treatment of the coronavirus.

Losses aside, the crisis is “a chance for the casino operators to look good to the new chief executive — and to look good even to Beijing,” said Carlos Lobo, a lawyer and gaming consultant based in Macao.

This is particularly important, he added, as all six of Macao’s casino operators face the possibility of a fresh public tender for casino licenses within two years. By winning goodwill from the territory’s leadership, he said, operators could lobby for a delay in the tender process to allow them to recoup their losses.

“This could end up being favorable to them,” Lobo said.


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