Gaming activity in Macau may have slipped in the first quarter of 2019, but tax revenue didn’t. According to the Financial Services Bureau, the city collected over $3.67 million in revenue thanks to the gaming industry in the quarter, an increase of 6.1% over the same period last year.
It’s common for there to be a discrepancy in the gaming revenue and the gaming tax revenue in a given quarter. There is often a delay between the recording of gross gaming revenue (GGR) and the recording of tax revenue on that GGR.
Gaming still accounts for the majority of the tax revenue in the city. So far this year, gamblers have provided 87.6% of the $4.18 billion the city has taken in across the board and, as is expected, this trend will continue throughout the year.
GGR for the quarter slipped 0.5% year-on-year, coming in at $9.42 billion. January saw the first decline in GGR since 2016, but March also recorded the second monthly drop of the year. GGR is taxed at 35%, but additional taxes are added that make the effective tax rate 39%. The gaming sector covers casinos, instant and Chinese lotteries, horse races and commissions that promoters of gambling junkets earn.
Macau expects to collect $12.15 billion in tax revenue from gaming this year. If the activity stays on its current track, the city shouldn’t have any problem reaching that goal. City officials often budget conservatively, which helps the numbers look better. Macau has budgeted for a fiscal surplus of $2.23 billion this year and, based on the first-quarter results, the full 2019 surplus at the current rate would be approximately $2.66 billion.
As of the end of the quarter, there were 41 casino floors open in the city. They are all run by just six companies—SJM Holdings, MGM, Wynn, Sands China, Melco and Galaxy Entertainment. SJM leads the way with the most casinos and satellites at 22.
Despite the major financial benefit gaming gives to the city, Macau wants to reduce its dependence on gambling activity. It has developed a plan to promote non-gaming options to attract families and other visitors but won’t see how the campaign is working for at least another 18 months.