Macau casinos may avoid non-gaming spending trigger this year
Macau casinos continue to recover in their first full year after Chinese President Xi Jinping reversed his "zero-COVID" pandemic policy. The controversial plan to trigger lockdowns should new COVID-19 cases be discovered has put the return to normal life on hold in mainland China and China's two special administrative regions (SARs).
Macau casinos continue to welcome tourists and their coveted high rollers. Macau, like Hong Kong, is one of China's two special administrative regions.
Gross gaming revenue (GGR) this year through October was about 148.5 billion patacas ($18.47 billion). The gaming industry rebounded 316% from last year but is still 40% below 2019, when six casinos won about $30.7 billion between January and October.
Sands, Galaxy, Wynn, MGM, SJM and Melco will all benefit this year as China makes cross-border travel easier. October was the Enclave's best gaming month since the coronavirus outbreak, with GGR totaling $2.42 billion.
Non-game expenditure trigger
When Macau awarded new 10-year gaming licenses to six casino operators late last year, the companies agreed to invest a total of about $13.5 billion in their resorts through non-gaming projects. The Macau SAR government is following the Las Vegas Principles and striving to become a diversified tourism market that is not just based on gambling.
If the gaming business hits certain benchmarks, the $13.5 billion figure could increase in the coming years. If the six concessions win 180 billion patacas ($22.4 billion) in the year to 2027, non-gaming spending requirements will increase by 20%, or an additional $4.48 billion.
In interviews with media this week, Macau Chief Executive Ho Iat Seng said he did not expect casinos to reach the threshold this year.
Whether it reaches 180 billion patacas will not be known until next month, but I can tell you that this number is impossible. “It has not yet reached 180 billion patacas,” the top legislator said.
The CEO's comments are somewhat puzzling given that Macau casinos have averaged monthly GGR of about $1.84 billion over ten months. Even at that pace, gaming revenue over the past two months would have increased by about $3.68 billion, bringing full-year revenue to about $22.15 billion, just below the $22.4 billion threshold.
However, Macau’s recovery has been accelerating in recent months. Casinos won $2.14 billion in August, $1.86 billion in September and $2.42 billion in October.
Non-Game Segmentation
Macau breaks down non-gaming investment demand at the end of 2022 based on gaming market share. Due to Sands China's leading position in the market, the company received $3.46 billion in non-gaming investment requirements.
Galaxy Entertainment acquired US$3.42 billion, Wynn China acquired US$2.05 billion, MGM China acquired US$1.87 billion, SJM Resorts acquired US$1.5 billion, and Melco Crown Resorts acquired US$1.24 billion.
Ho told reporters that he has not formally approved the casino's non-gaming spending plan, although the project has been submitted to the government and is under review.
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Source: www.casino.org
