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The Macau gaming industry has delivered the local government MOP104.04 billion ($12.97 billion) this year through November, accounting for 86 percent of all tax revenue collected by the Special Administrative Region (SAR).
The gaming industry in Macau is being fueled by the multibillion-dollar resorts on the Cotai Strip. (Image: Kosublog)
Statistics released this week by the Macau Financial Services Bureau reveal the enclave’s six casino concession holders directed nearly $13 billion to the SAR government.
Gross gaming revenue (GGR) through November stands at $33.6 billion – a 2.4 percent year-over-year decline. Casino win for Sands, MGM, Wynn, Melco, and Galaxy is taxed at an effective rate of 39 percent. SJM Holdings – the company that held a monopoly on casino gambling in the region for 40 years until 2002 – is taxed slightly less at 38 percent.
Macau received the most tax revenue from casinos when the gaming industry hit its all-time GGR mark in 2013 with win of $45 billion. The government received roughly $17.5 billion from table games and slot machines that year.
Diversifying… Slowly
The Macau Financial Services Bureau central account budget reports 2019 total tax revenue of $15.1 billion through 11 months, meaning casinos have accounted for 85.8 percent of all taxes. A distant second behind gaming are direct taxes – personal and corporate taxes – which totaled $1.26 billion.
Macau is trying to reduce its dependency on gaming.
The International Monetary Fund said earlier this year that the enclave would be smart to issue incentives to the six casino operators that encourage investments in non-gaming attractions, as well as new convention space. Macau Liaison Office Director Fu Ziying echoed those recommendations, and has pointed to nearby Hengqin Island for potential development.
Macau is amid its 20th anniversary celebration, the official date being December 20, when Portugal returned its sovereignty to China in 1999.
People’s Republic President Xi Jinping is expected to sign-off on the SAR’s wishes to launch a yuan-denominated stock exchange. The thinking is that with a stock exchange, Asian businesses will want a physical presence in the region, and transform the casino hub into more of a financial center.
Conservative Budgeting
Macau’s two-year run of increasing GGR will come to end after this month. Casino win is expected to experience its worst month of the year in December, capping off a down 2019.
However, despite the reduced gaming revenue, the Macau government will collect more from casinos than it budgeted. In its 2019 fiscal outline, the Financial Services Bureau expected its gambling share through November to be $12.24 billion – meaning the budget is already flush with $730 million more than forecast.
Macau’s government has been historically conservative when it comes to projecting casino tax revenue in its annual budget. There were numerous uncertainties threatening the gaming industry this year, including the trade tensions between the US and China, protests in Hong Kong, and economic slowdown on the mainland.
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