Macau’s casino tax revenue on the up

Macau’s casino may have turned a corner, with a 52.4 per cent increase in tax revenue reported by the Financial Services Bureau in Macau for August.

Calvin Ayre reports the figure, $76.8 million, was a marked increase on a month earlier.

Despite the substantial monthly increase, Macau is still a long way off from its normal revenue levels.

The gross gaming revenue reported by the casinos remains flat and is down 94.5 per cent year-on-year.

The total GGR for the city’s casinos was $166.38 million, an indication that the relaxation of border restrictions has not had a huge impact on visitation to Macau’s casinos.

At the end of August, the cumulative total GGR for casinos in Macau had only reached $4.552 billion, an 81.6 per cent decrease compared to the same period last year.

As a result, Macau was only able to receive about $2.85 billion in tax revenue from its gaming properties.

This is only 29.8 per cent of what it had received over the first eight months of last year, and is obviously impacting previous budget forecasts.

Macau had anticipated taking in about $520 million each month in gaming tax revenue and, with only four months left in the year, there’s no chance it will be able to recover all the losses.

The actual figures represent just 45.6 per cent of the forecasted take for the year and Macau has had to revise its end-of-year projections to reflect the shortfall.

Now, Macau believes it will receive a total of around $6.252 billion in gaming tax revenue by the time 2020 wraps up.

Gaming has always been a major source of revenue for Macau and out of the tax revenue collected in the first eight months of this year, has contributed about 75.3 per cent of the total tax revenue received.

That figure stands at $3.788 billion; however this is 65 per cent lower than what it was for the same period last year.

This drop, combined with additional and unexpected outlays needed to combat COVID-19 will see Macau with a deficit of $4.872 billion for the whole of 2020.

Macau operators forecast to post $1b quarterly loss

Macau casino operators are expected to post a loss of more than $1 billion collectively in their earnings before interest, tax, depreciation and amortisation for the quarter ending June 30, according to a Bloomberg survey in July.

Each of the six operators will likely have negative quarterly EBITDA when they start reporting their earnings, according to the survey of eight brokerages.

SJM Holdings and MGM China Holdings are expected to lead the tally of year-on-year declines.

Macau’s casino industry has seen gaming revenues plunge by more than 90 per cent for three straight months starting April, as the COVID-19 pandemic caused the closure of borders.

Recovery prospects in the region have been brightened since neighbouring Chinese province Guangdong lifted quarantine requirements for travellers returning from Macau in early July.

China has also resumed issuing its individual visas.

Sanford C Bernstein analyst Vitaly Umansky said: “The initial enthusiasm around border easing is a sign of some pent up demand, but without IVS restart, V-shape recovery is not expected.”

Patrons slowly returning to Macau’s casinos

Macau has been receiving about 2000 tourists a day following the relaxation of its quarantine arrangements for travel to Macau’s neighbouring Chinese mainland province Guangdong, compared to “a few hundred” in the weeks prior, a senior Macau official said on Friday.

Director of Macau Government Tourism Office Maria Helena de Senna Fernandes described the improved daily tally as still “low” relative to the numbers before the pandemic.

She was speaking in an interview with the Chinese-language radio service of the city’s public broadcaster TDM.

The relaxation of quarantine arrangements for travel from Macau to Guangdong came into effect last Wednesday.

Mainlanders had mostly not needed to undergo any form of quarantine to enter Macau, but they had been subject to a 14-day quarantine rule when going back via Guangdong.

Investment analysts said that had acted as a deterrent for people to come to Macau in the first place.

Nonetheless, it was also announced on Monday that all would-be customers of Macau casinos would from Wednesday, need a certificate showing they had recently tested negative for COVID-19.

A number of analysts said in commentary on changes that obstacles remained to large-scale tourism.

On Friday, Ms Senna Fernandes suggested it might take a “relatively long time” to see Macau’s inbound tourism recovery to pre-COVID levels.

Mainland Chinese customers have been – since the time of Macau market liberalisation and China’s further opening up, at the start of the current century – a major source for Macau’s inbound tourists.

In 2019, the city had more than 39 million visitors, nearly 71 per cent of them from mainland China, according to data from Macau’s Statistics and Census Service.