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Macau Casinos Generate 77% of All Taxes in 2023, 2024 Already Looking Good
By Jeff Osienya Mar 15, 2024 IndustryLicensed casinos in Macau, China’s Special Administrative Region (SAR), generated more than three-quarters of its tax income in the 2023 calendar year. The SAR’s lifeblood is back to firing on all pistons, strongly recovering from pandemic downturn.Macau’s booming gambling industry remains the principal tax contributor for the Special Administrative Region. This is according to the SAR’s Financial Services Bureau, which released a report outlining the total tax revenue for the Macau government. The gross gaming revenue reported by the casinos was $22.7 billion, representing a 334% year-over-year increase from 2022.
Out of the $10.5 billion paid to the government in FY 2023, $8.1 billion came from Macau’s six casino concessionaires. This makes up over 77% of the total revenue generated, affirming the industry’s position as the primary contributor to Macau’s economy. The numbers are much higher than projected by gaming analysts within the government, who had predicted that the casinos would bring in approximately $6.3 billion in tax revenue.
Rebound from Zero-Covid Policy Rules
Macau is one of the hardest-hit regions during the COVID-19 pandemic, having seen new virus outbreaks in mid-2022. This resulted in a lockdown that lasted over six months, leading to the closure of several businesses SAR reporting the lowest income in its history. The lockdown, coupled with the government’s zero-Covid policy, meant that the area was restricted.
Thus, Macau’s reliance on tourist arrivals from Mainland China and Hong Kong meant that gambling income would plummet to an all-time low. All efforts made by the government and operators since this shocking period have been to ensure a smooth recovery from the pandemic while keeping in line with the established policies.
Diversification of Tourism Industry Still Underway
After nearly three years of tackling challenges presented by the pandemic, the Macau government concluded that it was time to diversify its tourism sector. The administration stipulated that all licensed concessionaries embark on non-gaming projects, including sports and esports competitions, cultural centers, movie theatres, art and music events, and theme parks. This was aimed at expanding the SAR’s tourism industry beyond gambling activities.
All these are meant to attract more than just the tourists interested in gambling, especially families. These efforts began in 2022 when the government included the condition for the six casino firms to invest about $15 billion on non-gaming projects during their new 10-year contract terms. The new goal of including more non-gaming ventures in the equation may propel the industry further, raising more income. Although the financial report does not reflect what degree these ventures contributed to the SAR’s economy, there is still time to assess the impact of the new investments on the overall revenue.
The restrictions were finally lifted in January 2023, and the industry started picking up from the low year. With the enclave now open to tourists, the year was successful, reporting nearly 28 million visitor arrivals, up from near-zero arrivals in 2022. This was also significantly higher than pre-pandemic levels, evidence that the region is headed for more than just a full recovery.
One thing to note is that despite the renewed focus on non-gambling-related tourist attractions, the report shows that the majority of the income came from VIP casino gaming, accounting for 80% of the GGR. This is 20% more than pre-pandemic figures in 2019. When the government set a cap on junkets for each of the casinos, there was a lot of speculation on the effect this move would have on the VIP gaming markets.
High-value VIP players have always been a significant driver in the Macau casino industry. Given the junkets’ role in bringing in these individuals in masses, the shrinkage of the junket sector forecasted some gloomy days. Surprisingly, the industry recovered quite well, and the income generated was way higher than had been predicted by gaming experts.
2024 Levels Pointing to a Good Year Ahead
With 2023 pointing to a remarkable rebound from the pandemic, 2024 kicked off with high revenues, with the government reporting a 67% year-over-year growth. February has also recorded a 79% year-over-year rise from 2023. However, this was a month-over-month decline from the January figure of $2.4 billion, as the Gaming Inspection and Coordination Bureau reported. The total recorded in the first two months amounts to $1.84 billion, a 143% rise from the same period in 2023.
The region is expected to receive over 33 million visitors for FY 2024, forecasting a GGR of between $26.82 billion (according to the government) and $28.98 billion (as estimated by Morgan Stanley) for the year. This translates to $925 million in tax revenue for the government. Moreover, according to the government, the tax revenue from gaming is set to go up to an estimated $10.38 billion at the end of the year. Fitch Ratings has also released a forecast indicating that the Macau gaming revenue is set to see a further 15% growth in 2024.
Regarding the recovery to pre-pandemic levels, the report reads:
Quote“Fitch forecasts Macao’s growth will remain strong at about 15% in 2024, based on our assumption that gross gaming revenue (GGR) will further recover to about 79.5% of the 2019 level this year from 62.6% in 2023. The economy rebounded sharply by 80.5% in 2023 after a 21.4% contraction in 2022. We expect the economic and gaming outlook to be bolstered by a further rise in inbound tourism and gaming operators’ non-gaming investments as part of their mandate over their decade-long concession term through 2033.”
Balancing Growth and Responsibility
Regarding the global gambling industry, Macau stands out as an unparalleled titan, its majestic casinos and bustling streets showcasing one of the biggest gaming markets in the world. The effect is much more pronounced for the local gaming market as the industry has consistently determined the economic stability enjoyed within the region’s borders.
Even amid uncertainties that arose due to the pandemic and new regulatory restrictions from the Mainland, Macau has proven resilient in withstanding challenges. Its success has extended beyond its borders and resonated throughout Mainland China’s financial landscape. As more and more projects continue to kick off with a view to the SAR’s future, the gambling industry remains the pinnacle of growth and prosperity.
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