Coronavirus is a ‘wake-up call’ for China, Macau casinos to embrace online gambling

The coronavirus that started in Wuhan, China, has hit hard the Macau casino business during the peak holiday season of the Lunar New Year. That has led one gaming industry expert to say the ripple effect of the virus and fears of a pandemic, including quarantines and travel warnings and restrictions, should be a “wake-up call” for the Chinese government and casino interests throughout Asia that it is time to legalize online gambling.

Jason Ader, managing partner at SpringOwl Asset Management and a former board member at Las Vegas Sands, said the most interesting observation he has had as the coronavirus situation evolves is how the virus has pushed gamblers to illegal online gambling and the one market in Asia where online gambling is legal: the Philippines.

“Daily online gambling is up 90% over the Lunar New Year holiday compared to last year,” Ader told CNBC’s “Squawk Box” on Tuesday. “That’s an unbelievable number, and it raises the issue of should land-based operators be converging around the world with online operators. That’s really the growing trend,” he said.

Online gambling is mostly unregulated in Asia and illegal in China.

“Asia is still very much the Wild West, it’s very unregulated, but [the land-based operators] are not getting any business. The online operators and Philippines licensees are picking up most of these players,” said Ader, who was a top-ranked gaming analyst at Bear Stearns for more than a decade. “I think it’s a wake-up call, not just in Asia but in the U.S. … The European companies are in leading positions.” Macau casinos are still open, but employees who interact with customers must wear masks, and they have detailed cleaning and hygiene in both front and back of the house. The chief executive of Macau has the option of closing these casinos if the outbreak intensifies.