CASINO

Genting Malaysia to reduce marketing expenses due to tax increase

TAGs: Genting Malaysia, tax

Costs of operating a casino in Malaysia are about to go up. Annual license fees are expected to increase to $36 million, according to the country’s Finance Minister, an increase of more than $7 Genting Malaysia to reduce marketing expenses due to tax increasemillion. In addition, the taxes paid on gross gaming revenue (GGR) will increase to 35%, a hike of over 10% above what is currently paid. This has led to Genting Malaysia’s stock price to fall and the casino operator is now saying that it will have to adjust its marketing expenses as a result of the new fees.

In a filing this past Wednesday with the Bursa Malaysia exchange, Genting said that it was “assessing the full implications” of the additional fees and that it would take “the appropriate next course of action.” Part of the review includes its “marketing expenditure and cost structure to mitigate the impact of the tax increases.”

A Maybank Investment Bank analyst, Samuel Yin Shao Yang, said this past Monday that Genting Singapore Ltd., operator of the Resorts World Sentosa in Singapore and Genting Malaysia sibling, and Cambodian casino operator NagaCorp might benefit substantially from the tax increase to be paid by Genting Malaysia on its GGR. They have the potential to steal business away from the company, especially if it decides to cut commissions paid to junkets or rebates that are paid to managed VIP players. These commissions and rebates are an important part of the competitive market to attract wealthy Asian gamblers.

According to Yin, “The new casino duty rate of 35 percent, effective sales and service tax of 3.7 percent and corporate tax rate of 24 percent, ‘crowns’ Resorts World Genting as the heaviest-taxed casino in Asia.” He added, “Macau casinos are also taxed at 39 percent of gross gaming revenue but they are exempted from corporate tax.”

Genting Malaysia operates a number of properties around the world, including the UK, the U.S., the Bahamas and Egypt. It is conducting a multi-year, multibillion-dollar renovation of the Genting Highlands property, which will more than likely now have to be pushed back.

There was no word on whether or not the tax and license fee increases will impact the company’s Resorts World Genting in Vegas. It has previously stated that the project is moving forward and expects to open its Skytropolis indoor theme park and 20th Century Fox World Theme Park next year.

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