The human toll of the Wuhan coronavirus is obviously of paramount concern, but its impact on businesses looks like it will be widespread as well, and one that will be acutely affected is the gaming industry in Macau.

Casino operations have been virtually wiped out as visits to the gambling enclave have plummeted 80% since the outbreak, and the stocks of the major gaming companies have been wrecked since the first reports of human-to-human transmission of the virus were reported in mid-January.

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Those operators like Melco Resorts & Entertainment (NASDAQ:MLCO) and Wynn Resorts (NASDAQ:WYNN) that derive the vast majority of their revenue and profit from Macau are being taken down the most, while the more geographically diverse MGM Resorts (NYSE:MGM) has not been affected nearly as much.

Once the crisis passes, there could be a sharp rebound in demand, but as the virus continues to spread and its severity grows, the situation appears as though the resolution is still well off into the distance. And even then, it may take time to woo gamblers back.

The Macau gaming industry was already weakening before this health crisis arose, and now some casinos are on track for major devastation.

Looming clouds on the horizon

Las Vegas Sands (NYSE:LVS) is the first casino to report earnings, and though its fourth quarter results ended Dec. 31, ahead of the knowledge of the virulence of the outbreak, the coronavirus' impact still overshadowed the earnings conference call.

Not only does Sands have extensive operations in Macau, but in nearby Singapore too. And though the extent of the downdraft is not nearly as big as it has been in the Chinese province, the effects are only just beginning to be felt.

Sands generates 64% of its revenue from Macau and another 23% from Singapore, bringing its total from the region to 87%, or $11.9 billion of the $13.7 billion total. The region also represents 91% of its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

As president and COO Robert Goldstein noted, "it would be foolhardy to think we can reduce cost enough to offset what's happening in the -- if this 80% decline continues, that's a real problem for any operator."

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A ruinous decline coming

What Sands results show, and what the other operators will undoubtedly affirm when they post their earnings, is that Macau was already heading into decline. 

The gambling mecca reported its first decline in gaming revenue in two years, and though there were some outlier events that contributed to December being the worst month of the year as revenue tumbled by double-digit percentages, leading Las Vegas Sands chairman and CEO Sheldon Adelson to admit the quarter decelerated quickly after what he deemed was an "extraordinary" October.

The first quarter of 2020 is going to be utter ruin for the industry. Wynn Resorts realizes three quarters of its adjusted EBITDA from Macau,, while Melco Resorts, which derives a similar percentage of its revenue from Macau, also has a presence in the Philippines,  which has essentially walled off all travel from China.l Galaxy Entertainment (OTC:GXYEF) derives virtually all of its revenue from China.

The casinos have also developed non-gambling activities to comply with an edict from Beijing to reduce their dependence on gaming. Galaxy opened a convention center and an events arena, Melco has its non-gaming Mocha clubs, and Las Vegas Sands operates the CotaiJet, a jetfoil ferry service to transport visitors from Hong Kong to Macau. While the latter contributes a de minimis amount, all of these ancillary operates will be similarly affected by the virus.

Dark times ahead

Goldstein predicts that when the crisis passes, business will bounce back strong, saying, "when it does resolve, Macao is going to be very, very, very busy because -- whether you know it or not, these folks like to gamble."

While he also says he doesn't know whether the rebound will occur in February or March, this could be a crisis with a much longer shadow than that.