Macau’s government is publicly expressing concern over its ongoing reliance on casinos after its gaming tax revenue fell nearly 40% in the first quarter of 2020.
On Monday, Ho Iat Seng, the new chief executive of the Special Administrative Region of Macau, issued his inaugural policy address. Ho (pictured) warned that the COVID-19 pandemic had “once again exposed vulnerability and risks of Macau’s economic structure” and that there’d been no “obvious” change from previous efforts to diversify its economy.
Ho’s address came a few days after Macau’s Financial Services Bureau announced that gaming tax revenue in the first three months of 2020 had totaled slightly less than MOP18.5b (US$2.3b). That’s 37.6% below the tax haul from Q1 2019 and only about three-quarters of what Macau’s government expected to earn in this most recent quarter.
Macau’s casino gaming revenue was down 80% in March and analysts have suggested April’s tally could fall by 95% year-on-year as ongoing travel restrictions between Macau and mainland China have slowed tourist traffic to a trickle.
Macau casino operators have been quietly lobbying for some kind of break on their 35% tax on gambling revenue (plus an additional 4% in ‘contributions’ to social causes) to allow them to weather this storm. But Ho said Monday that there are currently “no plans for reducing the tax” based on his view that operators “still have the means to endure.”
Ho did suggest that Macau would lift some of its own travel restrictions next month. Macau’s government is also lobbying its mainland counterparts to “resume issuing tourist visas” as soon as possible as well as to expand the number of cities eligible for the Individual Visit Scheme. Ho added that plans were underway to expand “the markets of origin of tourists” to reduce Macau’s reliance on Chinese tourism.
Like his predecessors, Ho urged Macau casino operators to “develop the mass market and to find more competitive non-gaming elements.” Mass market gaming has outperformed VIP baccarat over the past five quarters but the VIP segment increased its share in Q1 2020 thanks to the decline in mass market tourism.
Speaking later at a press conference, Ho said the pandemic disruption wouldn’t interrupt the schedule for issuing new casino concessions in 2022. However, details of the tender process aren’t likely to be released until next year, following a public consultation in the second half of 2020.
Ho stayed mum on whether Macau plans to expand the number of available concessions beyond its current six. But while these six concessionaires will be allowed to apply to renew their concessions, renewals won’t be automatic and the tender competition will be open to “everyone.”
