GGRAsia – Macau gaming table cap untouched until 2022: govt

Macau gaming table cap untouched until 2022: govt

Nov 27, 2015 Newsdesk Latest News, Macau, Top of the deck

The cap on the number of new live dealer gaming tables allowed in Macau casinos will not be amended until at least the end of 2022, Macau’s Secretary for Economy and Finance, Lionel Leong Vai Tac (pictured centre), said on Thursday.

“The allocation of gaming tables [to casino operators] will depend on whether their proposals meet our guidelines,” Mr Leong said during a question and answer session at a plenary sitting of Macau’s Legislative Assembly.

Mr Leong stated during the encounter with legislators that the Macau government stands by the table cap. The policy aims to limit the increase of live dealer table numbers to 3 percent compound annual expansion until the end of 2022, from a base of 5,485 tables recorded at the end of the fourth quarter in 2012.

Some investment analysts covering the gaming industry had floated the possibility of the government allowing “a slight relaxation of [the] table cap” for those new casino resorts with a lot of non-gaming elements. They had suggested such a move would be read by investors as a sign that public policy was clearly aimed at supporting Macau’s gaming industry.

Under the arithmetic of the government’s gaming table cap, a total of 1,097 tables remain to be shared between the four major Cotai projects yet to open, said a note on November 18 from Union Gaming Securities Asia Ltd.

Japanese brokerage Nomura said in a note this week it does not anticipate a price war among Macau’s six operators as they compete for share in the mass-market gambling segment, where player demand has been more resilient than it has in the VIP segment during China’s anti-graft campaign. “We do not assign a high probability to a full-on price war, as casino operators have been effectively scaling back table supply (when demand is weak) instead of trying to fill tables by compromising on margins,” said the Nomura team.

On Thursday, Mr Leong said the government would look into the non-gaming components of the latest generation of casino resorts being developed on Cotai by Macau’s six gaming concessionaires, and how each company forms partnerships with local small- and medium-sized enterprises, among other factors, before deciding on table allocation for each new property.

Two big new Cotai developments that opened this year – Galaxy Macau Phase 2, bundled with its sister property Broadway at Galaxy Macau; and Studio City – each received on aggregate the same size of table allocation – 250 new-to-market units.

Mid-term review

The secretary also confirmed on Thursday that the government has received the report from the “mid-term review” of the city’s gaming industry that it commissioned earlier this year and which had commenced in May. The government is currently assessing the report and the preliminary results should be released early next year, said Mr Leong.

The government official said the mid-term review had included an assessment of Macau’s junket operations. In his comments on Thursday he pledged to strengthen supervision of the gaming industry.

“We need to have a more strict monitoring of VIP gaming promoters [junkets], while keeping them internationally competitive,” said Mr Leong.

Asked about the possibility of creating a database listing junket clients with outstanding debts, the secretary said such a measure would have to comply with the Macau Personal Data Protection Act.

“Creating a list of clients with outstanding debts would involve sharing personal information,” said Mr Leong, adding that such a list could not be allowed to breach relevant laws.

Macau casino gross gaming revenue (GGR) has fallen for 17 consecutive months in year-on-year terms since June last year. GGR is down 35.5 percent in the first 10 months of 2015 compared to the prior-year period.

The Macau government forecasts GGR to come in at MOP200 billion (US$25 billion) in 2016, a further decline from the aggregate annual tally expected for this year. It expects an average of MOP16.6 billion per month in GGR next year, Macau’s Chief Executive said last week.

The government expects to collect a total of MOP70 billion in fiscal revenue from direct taxes from gaming in full-year 2016, according to the 2016 budget announced on Wednesday. The gaming industry is the major source of Macau’s fiscal revenues. The government levies an effective tax rate of 39 percent on casino GGR – 35 percent in direct government tax, and the remainder in a number of levies to pay for a range of community good causes.