A year ago, Macau’s government had expected to see continued growth as the city entered 2020, but the reality has been quite different. COVID-19 came in and stayed like an unwelcome houseguest, and is still not willing to leave after being politely asked numerous times. As a result, Macau’s casinos have not been able to produce nearly as much revenue as they would have liked to have seen and gross gaming revenue (GGR) is down substantially from where it should have been. So much so that Macau’s government is expecting to see the final tax revenue for the year come in almost three-quarters lower than what they had forecast for 2020.
According to an update published by the Macau government for the fiscal year 2020 budget, city leaders expect to end up with about $3.69 billion in taxes from its gaming properties this year. That includes $3.28 billion from GGR, a massive 71.1% drop from what the government was anticipating. It’s also 42.2% lower than what the government forecast when it updated its 2020 fiscal year budget the past April.
To help offset the losses, Macau is going to pull just over $1 billion (MOP8.1 billion) from its reserves to cover some expenses this month; however, that’s not a lot compared to the losses. Across the first ten months of the year, the city’s gaming industry paid around $3.04 billion in tax revenue, but this was 74.1% lower than what they paid for the same period last year. It’s also a major disruption to the positive economic flow Macau had been enjoying over the past couple of years.
In the latest update to the budget, Macau predicts it will receive around $26.2 million in taxes on commissions paid to casino junkets, 41.7% less than what it previously anticipated. In addition, the city won’t be able to count on as much casino-generated tax revenue for its special projects, such as urban development improvements and Macau’s social security system, as tax-led contributions from the gaming industry for this segment is going to be off by 71.2%. Macau only expects to be able to count on around $187.6 million to dedicate to special projects, as GGR through the end of November was cut by 80.5% compared to the same period last year, reaching only $6.58 billion.
Since roughly 2015, Macau had been improving, drawing more visitors and becoming a major international gambling hub. Every year subsequent to that, it had recorded positive movement; however, 2020 brought that trend to an end. By the end of this year, under six million visitors will have arrived in the city, a staggering drop from the 39.4 million that passed through Macau’s border control points last year.
Highlighting the impact COVID-19 has had on Macau, of those six million visitors, January recorded the most. The first month of the year saw around three million visitors make their way to Macau, and December isn’t going to help much. According to Macao Government Tourism Office Director Maria Helena de Senna Fernandes, “Right now, the only market that we can work on is mainland China, and the Christmas [holiday] is not a period of high travel in mainland China. We don’t anticipate a very high number of bookings.”
