GGRAsia – Macau VIPs to cut visits if total smoke ban: KPMG

Macau VIPs to cut visits if total smoke ban: KPMG

Nov 23, 2015 Newsdesk Latest News, Macau, Top of the deck

Were a full smoking ban to be introduced in Macau casinos, the average frequency of visits per annum of VIP customers would be reduced by 1.15 of a time, and the average length of stay per trip would be reduced by 0.56 of a day, claims a study commissioned by the city’s six casino operators.

The report by consultancy KPMG was presented privately on November 11 to a committee of Macau’s Legislative Assembly. At that time only an outline of the findings was given to the media. The most prominent of the findings revealed at that time was the suggestion that Macau’s annual gross domestic product (GDP) could be reduced by 16 percent under a full smoking ban.

On Friday the detailed findings of the report were released to the media. It included a claim that a full smoking ban could reduce by 20 percent Macau’s total fiscal receipts.

The study said the source for the economic impact findings was a survey with customers of the six gaming operators; consultations held with 37 local small- and medium-sized enterprises (SMEs); and “KPMG analysis”.

Smoking on casino main floors in Macau is currently only allowed in airport-style enclosed smoking lounges that do not contain any gaming tables or slot machines. Having a cigarette while gambling is at present still allowed in VIP rooms.

On July 10, Macau legislators approved the first reading of a government bill that proposes the abolition of casino smoking lounges and a full smoking ban in VIP areas. The bill is now at committee stage in the Legislative Assembly, but it is likely to be next year before the revised rules become law.

KPMG’s report, released to the public on Friday, indicates that if smoking lounges in Macau casinos were retained, the average frequency of visits per annum of VIP customers would be reduced by a more modest 0.08 of a time, and the average length of stay per trip will be reduced by 0.08 of a day.

Were a full smoking ban to be introduced, the average frequency of visits per annum of mass market customers would be reduced by 0.06 of a time, and the average length of stay per trip would be reduced by 0.06 of a day.

Survey methods

KPMG said it conducted 542 surveys of casino customers. A total of 71 percent of all customers responding to the survey either supported the retention of smoking lounges for patrons, or opposed the proposed smoking ban, said the study.

According to the 27-page document the study also included “approximately 34,000 surveys of employees that are directly employed by the six gaming operators”.

The report said 66 percent of casino employees that responded to the employee survey portion of the study either supported the retention of smoking lounges for patrons, or opposed the smoking ban.

“The employee survey was conducted during 19 May – 3 June 2015 via a secure online web platform at the gaming premises of the six gaming operators,” said KPMG.

The consultancy said the employee survey represented approximately 40 percent of all casino employees and consisted of both gaming staff (81 percent) and non-gaming staff (19 percent) – matching the staff profile of the six gaming operators. It also included smokers (23 percent) and non-smokers (77 percent).

“The employee and customer surveys are both statistically robust, representing a confidence level of 95 percent and a margin of error of 0.5 percent and 4.2 percent respectively,” said KPMG’s report.

KPMG’s document details its assessment of the economic impact if a full smoking ban were introduced in Macau casinos. It said the estimate of a 16 percent decline in Macau GDP related largely to a reduction in direct gaming tax payable to the Macau government. Government tax revenue loss and salary loss would represent an aggregated loss of 9.7 percent, and would contribute 60.6 percent of the estimated likely GDP loss. KPMG said if smoking lounges in Macau casinos could be retained, Macau GDP “may only decrease by 0.71 percent”.

In the first six months of 2015, Macau’s GDP contracted by 25.4 percent year-on-year in real terms because of the ongoing downturn in the city’s casino industry, according to official data. Macau also gets most of its public revenue from taxes on casino gaming, levied at an effective rate of 39 percent of the gambling gross.

The Macau government has admitted it might reconsider its position regarding the proposed full smoking ban, depending on the results of the ongoing consultations being conducted by the Legislative Assembly’s working committee.