Macau Chief Executive Ho Iat Seng ‘Confident’ Regarding Local Casino Industry
Posted on: February 27, 2023, 09:57h.
Last updated on: February 27, 2023, 02:32h.
Macau Chief Executive Ho Iat Seng remains confident that the region’s six casino operators will win, at minimum, MOP130 billion (US$16 billion) off of their gamblers this year.
Gross gaming revenue (GGR) continues to rebound after China President Xi Jinping in late November lifted “zero-COVID,” the policy that prompted lockdowns in the event of new coronavirus outbreaks. The strict scheme kept life on hold in the Special Administrative Region (SAR) for much of the past three years.
The six casino giants licensed to operate games of fortune in the region are optimistic that 2023 will be the year when gaming revenues recover to near pre-pandemic levels.
They won about $1.43 billion in January to kick off the year. If the industry can maintain that momentum throughout the following 11 months, the Macau government’s full-year revenue projection of $16 billion would be easily covered. January is where China’s annual New Year holiday fell in 2023.
Officially occurring on January 22, most workers had a week off for the holiday that celebrates the arrival of the second new moon after the winter solstice. The holiday came just several weeks after Xi’s lifting of “zero-COVID.”
Three years of pent-up demand for travel was let loose, and Macau counted nearly 1.4 million travelers through its border gates in January — more than double the number of guests welcomed in January 2022.
Chief Executive ‘Confident’
Some gaming analysts focused on Macau believe the local government’s $16 billion in casino gross gaming revenue (GGR) might be a bit optimistic. As travel conditions subside and return to more normal levels in the months ahead, those market observers wonder how gaming will be impacted.
Forecasting Macau’s gaming industry in 2023 is quite difficult after the region overhauled the industry in recent years. VIP junket operators that kept casinos’ private high-roller rooms bustling have largely been forced out on Xi’s demands.
As a result, the casinos are focusing on the mass market. Though they gamble less in terms of money wagered, casinos say they can profit nearly as much off of a general public patron. That’s because they don’t share the revenue with a junket or provide nearly the same incentives, like comped rooms and free food and beverage.
While the industry’s outlook is a bit clouded, Ho is resilient in his thinking that $16 billion is a realistic goal.
This year’s GGR of MOP130 billion is our target and we are confident that we can reach this target,” Ho said last Friday, as reported by Inside Asian Gaming.
On $16 billion in casino revenue, Macau would receive about $6.4 billion in gaming taxes. Macau isn’t taking any chances, however, as the local government has authorized using up to $4.5 billion in reserve funds to cover its 2023 budget, should gaming not live up to expectations.
Ho Pans Analysts
Ho said he won’t comment on some analysts projecting less than $16 billion in 2023 casino revenue.
“The investment banks all estimated last year that we would recover by half. I will not comment on the accuracy of their estimates,” Ho said.
Macau’s gaming revenue last year totaled $5.25 billion. The six casinos won $10.82 billion in 2021 and about $7.6 billion in 2020. Before the pandemic in 2019, the casinos won $36.5 billion from gamblers.
JP Morgan analysts got 2022 majorly wrong, as they projected that GGR would come in around $18 billion. But that was before Macau experienced its largest COVID-19 outbreak during the summer, and the local government shuttered the casinos for 12 days.
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