Macau Casinos Witness Revenue Drop amid Trade War and Hong Kong Protests
The effects of US-China trade war have started to impact the demand of Macau casinos, as November records show the world’s largest gambling hub heading towards its first annual revenue decline in past three years. Besides the trade war, the Hong Kong protests have also aggravated the situation.
As stated by the data from Gaming Inspection & coordination, in the month of October, the gross gaming revenue was recorded at 22.9 billion patacas (US$2.8 billion), which is 8.5 percent less than 2019. Analysts claim that the fall comes as some high roller players delay their trips to Macau casinos.
Even though there has been a plunge, analysts continue to remain optimistic as the figure is better than the 10-13 percent drop expected by them. The year-to-date revenue is down by 2.4 percent.
With the ongoing protests in the financial hub of Hong Kong, the transport facilities have been severely affected, deterring travelling in the former British colony and in Macau too. Although the impact on Macau casinos is comparatively less, various sectors of China’s economy have become victim to fallouts. The yuan currency is also receiving heavy blows.
Demand from big punters has also been affected by the tightened liquidity in the high roller VIP sector due to an attack by Chinese state media on the biggest junket operator of Suncity.
Marking 20 years under Chinese rules, President Xi Jinping is supposed to visit Macau in December. As per analysts, this move will put direct pressure on VIP gaming revenues as the rich put off visiting Macau casinos. As per the Credit Suisse Group Analyst, Kenneth Fong, “Post Xi’s visit, the Visa policies to Macau will be tightened.”
Even though it is difficult to predict, Macau casinos are expected to show signs of improvement in March 2020, possibly due to pent up demand. A three percent increase is estimated, but there is still a long way to reach the double-digit in 2017 and 2018.
Macau casinos, that are a major part of the gaming industry, have contributed nearly MOP 94.04 bn ($11.7 billion) to the regional government’s tax kitty till October 2019, seen as a 0.4 percent rise than the previous year.
As a part of their tax payment, the casinos in Macau pay a flat rate of 35 percent on their Gross Gaming Revenue (GGR). Other small levies take the tax rate to 39 percent. The tax rate covers horse racing, traditional lotteries, instant lotteries, and earning of operators who arrange junkets in the gambling.
In order to head the gambling hub of Macau, China has appointed some new officials, changing key roles including the city’s economy and justice secretaries. Soon to be Macau chief executive Ho Iat Seng will be formally sworn on December 20.
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