January was a good month for the taxman in Macau. According to information provided by the city’s government this past Monday, the gambling mecca received over $1.26 billion (MOP10.19 billion) in gaming taxes in January, up from the $1.08 billion it collected in the same month last year.
Revenue from gaming has accounted for around 10.4% of the entire forecasted amount for 2019. The city has previously stated that it expected to receive $12.151 billion in taxes over the course of this year, of which $10.194 billion would be derived from gaming.
Gaming operators in Macau pay 35% in taxes on their gross gaming revenue (GGR). However, there are other taxes assessed that make the effective tax rate 39%. The total tax revenues include taxes from traditional Chinese lotteries, horse and greyhound racing, commissions earned by junket promoters and instant lotteries.
Over the first 11 months of 2018, Macau collected almost $12.108 billion in gaming taxes. This was an increase of 14.1% more than what it received for the same period a year prior. This year, the city’s government has forecast that it will receive 13% more in gaming taxes than it received in 2018.
Despite the increase in the tax revenue, gaming revenue actually dropped in January. It was down 5% year-on-year, the first decline seen by the city in the past 29 months. Macau reported $3 billion in gross revenue for the month, compared to the $3.24 billion it collected in the same month a year earlier.
When it comes time to report February’s numbers, it wouldn’t be surprising to see continued tax revenue gains. The Chinese New Year proved to be strong for Macau, with visitation increasing by 26.1% over last year. While an increase in tourism doesn’t necessary translate to an equal increase in gambling, the city expects to see a continued improvement in gambling numbers and could ultimately break its full-year forecast.
Macau’s government expects a total revenue of $14.225 billion this year from all contributing sources, and forecasts expenditures to be a little more than $9.69 billion. However, the city is known to be conservative when it estimates its numbers.