In the first quarter of 2023, casinos in Macau saw a recovery, with Galaxy Entertainment on Monday the newest to announce a big rebound in profit after the official lifting of Covid-19 restrictions.

Returning to the status of invincible casino capital:

Furthermore, Macau has once again become the unbeaten casino capital of the world, beating Las Vegas in terms of gross gambling revenue, after falling behind after strict pandemic policies closed the territory off from its customers.

In this regard, Hong Kong-listed Galaxy Entertainment said: “Net revenue had recovered to more than half its pre-pandemic figures. Apart from our Galaxy and StarWorld casinos on Macau, the company has a shareholding in rival Wynn Resorts and is seen as better adapted to the current environment where the focus is on the mass market.”

“[The results affirm Galaxy as] our top pick in the Macau gaming sector alongside Sands China,” JPMorgan’s DS Kim said on Monday, citing the late Sheldon Adelson’s Las Vegas Sands’ Macau business, which also focused on casual players instead of high-end players.

Unexpected recovery:

The power of this comeback was unexpected for analysts, following a crackdown on gambling that involved the arrest of major promoters who supplied VIP players who had pooled their money. However, even the VIP segment is displaying signs of rebound.

In this regard, Ben Lee, casino analyst at IGamiX, said: “We all expected the VIP segment would be quite depressed [compared] to what it had been in the past, but the stronger than expected rebound . . . has surprised us all.” In addition, Galaxy’s income before interest, tax, depreciation and amortization were higher than a consensus estimate of HK$1.7bn. Net profit was HK$7bn, compared to HK$13bn in the same quarter of 2019 before the pandemic.

In this regard, Kim said: “Galaxy reported ebitda of HK$1.91bn ($240mn), implying a 48 per cent recovery versus pre-Covid-19 levels. This is in line with its peers’ 46 per cent recovery on average in quarter one. The upside came from . . . solid mass performance.”

Other Macau casinos that have seen a recovery include:

  • Sands China, the Macau unit that owns five major properties, earlier revealed a net profit of US$1.27bn for the first quarter, compared with US$2.33bn in the same quarter of 2019 before the pandemic. Since the sale of Las Vegas in 2021, the company is now almost entirely dependent on its casinos in Macau and Singapore for its income. However, its recovery has been hampered by serious labour shortages, wich left only two-thirds of Sands hotel rooms available in the first three months, although management said the situation has since improved;
  • Earlier in May, MGM China announced HK$4.8bn in net income for the first quarter, nearly 84% of its profit for the same period in 2019;
  • According to analysts: “SJM is a laggard among the six operators and reported net revenue of HK$3.7bn compared with HK$8.47bn in the same quarter of 2019.” JPMorgan’s Kim said: “It’s the only Macau earnings this quarter that’s not a strong beat. [But] it is still reassuring that even SJM . . . has seen demand ramping up month after month.”

The Chinese City’s government applied a series of policies that chased away foreign workers, many of them worked in the hospitality sector. Moreover, authorities at one point prohibited foreign workers from re-entering Macau’s borders after leaving, as part of Covid prevention measures.