Macau casinos may soon be forced to increase non-gambling spending
Macau casinos have seen a rapid recovery in gaming revenue in the first year after Chinese President Xi Jinping ended a "zero-COVID" pandemic response that brought life to a standstill in the world's second most populous country.
Macau’s Gaming Inspection and Coordination Bureau reported gross gaming revenue (GGR) of 17.2 billion patacas, or about $2.13 billion, in August. August has been a busiest month for casinos since the coronavirus outbreak began in Wuhan, China, in January 2020.
Xi Jinping ended the Zero Covid Plan in late 2022 after widespread protests and criticism from many foreign leaders. At the same time, the Macau government issued new ten-year licenses to six gaming operators (Sands, Galaxy, MGM, Wynn, SJM and Melco).
In return for the license, the six gaming giants agreed to collectively invest 118.8 billion patacas ($14.72 billion) in their resorts over the concession period. The vast majority ($13.5 billion) must go to non-gaming projects.
Game is about to trigger
A little-known condition of the new gambling licenses issued by Macau last year was that casinos' non-gambling participation could increase significantly if their gambling revenue returns to pre-COVID-19 levels. The concession stipulates that if the six operators win 180 billion patacas or more in the year to 2027, the non-gaming expenditure requirement will increase by 20%.
Within eight months, total gaming revenue in 2023 will reach 114 billion patacas. If the gaming revenue of casinos in the past four months is similar to that of the first eight months, averaging about 14.25 billion patacas every 30 days, Macau casinos’ full-year gaming revenue is expected to be about 171 billion patacas.
However, Macau casinos have performed strongly in recent months as business continues to improve.
Macau Casino Profit (MOP) 2023
January – 11.58B February – 10.32B March – 12.73B April – 14.72B May – 15.56B June – 16.66B August – 17.21B
According to data, monthly gaming revenue from Macau casinos continues to increase and is expected to approach the 180 billion patacas threshold.
Financial ability
Macau casinos are still suffering from the effects of the China pandemic more than three years ago. Although their properties are nearly lifeless, the concessions are largely in compliance with the Macau government's demand not to lay off workers.
But for Macau's casino giants, the pandemic comes after more than a decade of prosperity. 2013 was a great year for the market, with six casino operators winning $45 billion. This leaves them with substantial financial reserves to deal with the pandemic.
Melco Crown Resorts founder, chairman and CEO Lawrence Ho said his company is "financially ready."
We will do that if GGR crosses the 20% mark. ” Ho said, according to GGRAsia, an online media company covering the Asian gaming market. “Everyone has a common goal, which is to diversify the market and attract more international tourists. We support them and will continue to talk to the government to ensure we reach consensus. "
Macau casino revenue averaged about 16.5 billion patacas over the past three months. Based on this calculation, the annual casino profit will reach 180 billion patacas, driving a 20% increase in non-gaming expenses.
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Source: www.casino.org
