The planet’s largest casino market had another stellar month as gross gaming revenue skyrocketed by 52.4% in June. City of Dreams isn’t only the name of a casino in the casino enclave of Macau. It should be the tagline underneath the sign welcoming you to the city. The government reported earlier today that revenue had risen to 20.8billion patacas ($2.6bn). It was slightly less than May’s figure of $3bn but that took into account the opening of the Galaxy Macau and also a public holiday in China.
Results for the first half of 2011 showed that the enclave’s total gaming revenue was up 44.6% to 124.1bn patacas and most of those bringing the good news (aka money, money, money) were from the mainland. There are still worries amongst those operating on the enclave though.
If the infrastructure problems weren’t enough to deal with, there are rumors constantly flying around involving the government. They stem from stories that the licenses of the six major operators may not be renewed beyond 2020/2022 and the fact that less favorable taxation may be offered.
Gary Pinge, head of conglomerates and gaming at Macquarie in Hong Kong is familiar with the region, commenting, “The Macau government makes 75-84 percent of its revenue from gaming taxes, so ensuring that they share in the benefits and that concessionaires are not making excess returns will be a key part of their philosophy.
“If this were an infrastructure or mining concession, investors would be pricing in the concession risk — so we are not so sure what makes a gaming concession in Macau any different.”
By then, hopes are high that most of those operating will have embarked on extensive diversification programs. It might take decades to come to fruition. At least they’ll have something to fall back on.