Macau casinos will be forced to go completely smoke-free, which analysts believe will further delay the gambling hub’s recovery from its current slump.
The special administrative region’s government posted a notice to its official website on Tuesday, affirming its commitment to ending all smoking in Macau casinos. The plan mirrors Beijing’s efforts to reduce smoking in public places on the mainland to reduce health costs associated with the country’s 300m smokers.
To ensure compliance with the new regime, Macau plans to raise smoking-related fines from their current range of MOP 400-100k (US $50-$12,500) to MOP 1,500-200k. Even the use of electronic cigarettes will be forbidden in casinos and their sale banned outright throughout Macau.
Macau’s government introduced a partial smoking ban last October that restricted smoking to VIP gaming rooms and specially constructed airport-style smoking lounges on the main gaming floor. Both of these exemptions will be eliminated under the new plan, despite protests by casino operators, who spent a lot of time, effort and money altering their properties to comply with the government’s demands.
MGM China told the Macau Daily Times that it had spent “millions” rejigging its gaming floor to conform to the earlier restriction. Collectively, Macau’s six casino concessionaires are believed to have spent over MOP 1b ($125m) refitting their properties. Sands China VP Michael Naylor said the company had constructed its smoking lounges “with the mindset that they were going to be here for a very long time.”
The government has offered no timeline for implementation of its new plan, although Deutsche Bank analyst Karen Tang believes the law will likely be passed by Q4 of this year, with implementation the following year. Based on the effect the main floor smoking ban had on mass market gaming revenue, Tang suggested already depressed VIP gaming revenue would likely fall a further 10-15% under the new law.
Macau gaming revenue has been falling now for a full year. June’s revenue figure will be announced on Wednesday and expectations are that the numbers could sink to a five-year low. Tang said previous projections that Macau might emerge from its slump by 2016 are “too optimistic” given the expected impact of the full smoking prohibition.
