Macau Coffers Have Collected Over $8.5 Billion in Gaming Taxes in 2017
Posted on: October 28, 2017, 04:00h.
Last updated on: October 27, 2017, 07:26h.
The Macau government is benefiting from the return of VIP play to the region’s casino resorts in 2017. Through September, the city’s coffers have taken in MOP 68.64 billion ($8.54 billion) in gaming tax revenue, an increase of 17.5 percent compared to the same nine months in 2016.
The surge in taxes is due to Macau’s casinos seeing their overall gross gaming wins skyrocket. After three years of plummeting revenues, VIP play, paired with an increase from the mass market, has fueled a 14-month run of year-over-year gains.
In 2017, gross gaming win is up almost 19 percent, with total revenue coming in at just over $24 billion. At this time last year, that number was just $20.25 billion.
Five of the six licensed casino operators are taxed at an effective rate of 39 percent. Thirty-five percent of the gross gaming revenue goes to the city, 2.4 percent is earmarked for the Infrastructure, Tourism, and Social Security Fund (ITSF), and 1.6 percent goes to the Macau Foundation, an organization that supports education.
The sixth licensee, SJM Holdings, pays the 35 percent and 1.6 percent Macau Foundation tax, but only 1.4 percent to the ITSF. SJM, billionaire Stanley Ho’s empire, held a gambling monopoly in Macau for four decades.
After three years of declines, primarily due to People’s Republic President Xi Jinping moving VIP junket businesses under the scope of his anti-corruption campaign that scared off high rollers and forced touring companies to close, Macau’s gaming industry was anything but optimistic heading into 2017. Gross win totaled over $45 billion in 2013, but fell to just $28 billion last year.
But 2016 did conclude with five straight months of year-over-year percentage gains. That created a bit of cautious enthusiasm. Still, few could have predicted the fortunes that 2017 has provided.
Heading into the year, the Macau government forecasted that it would receive MOP 71.86 billion ($8.94 billion) in gaming taxes. With three months remaining, the industry has already fulfilled 95.5 percent of that estimation.
Assuming revenue stays on the same blistering 19 percent pace, Macau casinos should be looking at income of roughly $33 billion. With the city government’s take at 35 percent, that would equate to around $11.5 billion, a nice $2.5 billion bonus versus pre-year estimates.
Many observers believe the city needs to use that money to invest in its infrastructure. Typhoon Hato, the most powerful storm to hit Macau in 53 years that killed 26 people and caused nearly $2 billion in damages, exposed the special administrative region’s aging foundation this past August.
From bridges and highways, to light rails and ferries, analysts believe Macau needs to quickly improve its infrastructure to keep up with rising visitation rates. Through September, visitor arrivals are up 4.2 percent.
“I remember government officials talking about plans to build a light rail in 2003 and now it is 2017 and there is still no rail system,” Spectrum Asia CEO Paul Bromberg stated last month. Bromberg’s firm is a gaming industry consultancy focused on Asian markets.
Macau has taken in $70 billion from gaming taxes over the last five years, but spent less than 10 percent on infrastructure.
Related News Articles
Related News Articles
- November 2, 2020 — 14 Comments—
- November 24, 2020 — 11 Comments—
- October 26, 2020 — 8 Comments—