September 26, 2018 by

Billions of Dollars Lost to Typhoon Mangkhut in Macau

If we ever needed a reminder of how all human activity is subject to the whims of nature, we need look no further than to Typhoon Mangkhut which, in addition to wreaking havoc on all inhabited lands in its path, has also caused the casinos on the island of Macau to close their doors temporarily.


Effects of the Shutdown

There are several aspects to the shutdown of all land based casinos in Macau.  One is the very present concern that casino gamers might either “discover” the advantages of gaming at an online casino or will simply become further enamored of online casino gaming.

Macau’s casinos have slowly been losing customers to online casinos.  One of the biggest advantages of an online casino over the gaudy land based casinos is the ability to avail oneself of many excellent bonuses.  All you need is to use the correct bonus codes and you can grow your bankroll by large sums of money with the bonuses.

It is true that many gamers love the gaudiness of land based casinos but these casinos’ operators don’t like to give people any extra reason to play at online casinos.

First Shutdown

The first licenses for land based casinos in Macau were issued in 2002 and this is the first time there has been a general shutdown of all casino operations on the island.  In a statement, the government of Macau cited the very real security and safety concerns that would entail keeping the casinos open.

Land based casinos need personnel who have to travel to the casino to serve players.  Every employee would be in some danger during their travel to and from the casino.

Land based casino hubs such as Macau and Las Vegas offer players the chance to go from casino to casino to try their luck at a different venue or simply to revel in the gaudiness each casino offers.  Such travel, usually by foot, would also represent a very present safety danger to visitors to the island.  In the view of the government, it was better to disappoint players who were looking forward to their time on Macau rather than risk visitors’ getting hurt in the typhoon.

Typhoon Hato

Last summer, Typhoon Hato caused a loss of gambling revenue of some $1.6 billion dollars.  This, even though casino operations remained in place during that storm.  Typhoon Hato was almost as strong as Mangkhut is and the fact then ten people lost their lives may have added to the extra precautions the government took this year.

The typhoon now churning in the Pacific, Mangkhut, is considered as big and as dangerous by an exponential amount as almost any typhoon and the lessons learned from Hato may have prompted the first ever complete shutdown of gaming on Macau.

Observers noted the very different approach the government is taking now as opposed to last summer.  Then, the shut downs were in the hands of the individual casino operators and today the government has unilaterally chosen to shut down all casino operations.

After the storm leaves the area, all casinos will be evaluated and it is unlikely that some will be allowed to open before all have been declared either fit to open or unfit to open.

Economic Blow

The land based casino industry had experienced two years of growth and excellent performance after a period in which the island’s attractiveness to gamers had waned.  Much of the growth of the past two years were attributed to high rollers staying with the land based casinos and the opening of several mega-gaudy casinos on the Cotai peninsula.

The government announced earlier that all casino operations would cease on Saturday night past until the damage from the storm could be assessed.  The value of stocks in Macau’s casinos dropped substantially.  This loss of market value followed losses in the 30-40% range after analysts said that the 2018 growth rate would pale when compared to previous growth rates—4% compared to 11%.

The drop in growth was said to be caused mainly by high rollers playing less at the island’s casinos.  Although this has nothing to do with the impact of Typhoon Mangkhut, some observers feel that the drop in betting by high rollers in Macau may be the canary in the coal mine for the entire world’s economic outlook.

Typhoons versus Hurricanes

By coincidence, Typhoon Mangkhut comes at the same time as Hurricane Florence in the Atlantic off the coast of the United States.  In the run up to Hurricane Florence, the governments of the several states directly in the storm’s path issued a mandatory evacuation order.  Hundreds of thousands of people heeded the order.  The road system in the United States is such that thousands of cars can travel out of harm’s way, albeit slowly.

In the case of Macau, the mainland is a different country entirely, China, with a different currency, culture, economy, and so on.  Macau, as an island, faced far worse dangers to residents but residents had little choice as to how to get away from the storm.  That was one of the many considerations the government weighed before shutting down casino operations.

Another consideration that likely weighed heavily o the authorities in Macau is that Typhoon Mangkhut had killed 25 people already in the Philippines at the time of the shutdown order.  That means that the typhoon had the potential to be a clear and present danger to anyone moving about in the storm.

Aftermath

Hopefully, the storm will cause relatively little damage in Macau and no one will lose their life to the storm.  Then the casinos of Macau will be able to get back to the far more mundane activity of competing in the real world of land based and online casinos.