What the U.S. Election Means for Macau Casino Stocks

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What the U.S. Election Means for Macau Casino Stocks

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With President Trump finally admitting his loss and asking his officials to prepare everything for the transfer of power to the Biden administration, the U.S. seems to be past the anxiety over how the election ends. However, as it is always the case when America turns from red to blue or vice versa, new questions arise. This time in particular, business owners across the country are wondering what the implications of the election results for the corporate world are. Casinos are no exception. So, here is a quick analysis of what is going to happen to Macau casino stocks.

What’s up with Macau Casino Stocks Anyway?

Except for the national lottery and sports lottery, gambling is illegal in mainland China. Hong Kong and Macau are the only Chinese territories where casinos are allowed, which makes them massive hubs for all gambling lovers from China and other countries. Unfortunately, this year’s pandemic-caused global lockdown has not been merciful to land-based casino owners across the world, including Macau. According to Reuters, gambling revenues for Macau operators have gone down 96% compared to 2019. The entire gambling industry is desperate for the stagnation to be over.

What Do Macau Casinos Have to Do with the U.S. President?

Now, this is a legitimate question to ask, but the answer is quite obvious. The economic rivalry between the U.S. and China is news to no one. The two superpowers are competing for the status of the top economy in the world, and each party is willing to do almost everything to protect its economic interests in the international arena. The relationship between the U.S. and China is best described as protectionist trade wars, and the Trump administration has escalated the rivalry.

What Does Biden’s Victory Mean for Macau Casino Stocks?

As reported by one of the online gambling industry’s leaders, it is likely that Biden’s victory will cause Macau casino stocks to rally. Although nothing is clear at this point, it is expected that the Biden administration will ease the restrictions his predecessor imposed and deescalate the relationship between the U.S. and China. If this is the case, Macau casino stocks may go up.

Sure, given that the pandemic is still in full swing, Biden’s victory will not solve all problems Macau casino owners are currently facing. According to Ben Lee, founder of Macau gaming consultancy IGamiX, “Macau has always been dependent on the outflow of funds from the mainland.” As long as the Chinese government gambling restrictions and limitations on the cross-border flow of funds persist, Macau will not see the light at the end of the tunnel.

What Could Save Macau’s Gambling Industry?

COVID-19 is not Macau’s biggest problem. The region has had as few as 46 confirmed coronavirus cases, and all patients have recovered successfully. Compared to what is happening to the rest of the country and world, this number is minuscule. However, Macau remains closed for anyone aside from tourists from mainland China, so casino owners keep losing money.

If the government wants the Macau gambling industry to recover (which is questionable in itself, given China’s attitude to gambling), it is time to start lifting more travel restrictions. Once foreign tourists are allowed to come to Macau, local casinos will resume making money. Sure, the revenues will remain way lower than in previous years for a while, but it will still be a step up from the current situation.

A Short Summary

Most experts agree that Biden’s victory is a good thing for Macau casino stocks. However, unless the Chinese government takes steps to ensure the survival of the Macau gambling industry (primarily lifting more COVID-19 travel restrictions), prospects for casinos are dismal.

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