Casino stocks rally as gov’t considers tax reduction if operators bring foreign players
Casino stocks in the U.S. trading market rallied on Friday following the SAR government’s announcement that it is considering lowering the gross gaming revenue (GGR) taxes by up to 5% if casinos are able to bring players from outside China.
As the market closed on Friday, gaming operators Las Vegas Sands Corp. and Melco Resorts & Entertainment Ltd saw their share prices rise up to 15%. Another U.S. gaming operator Wynn Resorts jumped 13%.
The president of the parliamentary Standing Committee, Chan Chak Mo, raised in the meeting that there is a goal of exploring foreign markets other than focusing on mainland China.
According to the lawmaker, prior to the pandemic, nearly 80% of gamblers hailed from mainland China, 10% from Hong Kong and 5% from Taiwan, implying the rest came from foreign markets.
Chan also expressed that the enactment of Article 303 of the Mainland’s Criminal Law may affect the source of tourists from the mainland; hence, there is a need to attract a different source market.
The Standing Committee of the National People’s Congress (NPC), China’s top legislature, has sanctioned an amendment to the national criminal law criminalizing anyone who “organizes citizens of mainland China to participate in gambling outside the country (or border), which involves a hefty sum or cases with serious consequences.” The amended law came into force on March 1, 2021.
The law foreshadows that anyone who “organizes” gambling trips or activities for mainland citizens to Macau will be considered to be breaking the law. It stipulates that a person who commits the gambling offence will be subject to imprisonment of a minimum of five years and a maximum of 10 years.
For the committee’s president, he hopes to exempt part of the taxes as an incentive to encourage operators to attract more overseas customers – given the stricter rules for mainland gamblers.
However, with the current closure of borders to foreign arrivals, which have been in place since March 2020, such a goal has a long way to go.
The SAR government taxes casinos in Macau 39% of gaming revenue — which includes a direct tax of 35% and other types of taxes for social and welfare purposes.
In the government’s current budget plan for the fiscal year, it aims to gather some MOP50 billion from gaming revenue, which means that the city should acquire a total of nearly MOP4.2 billion in taxes per month.
Late last year, the government has estimated MOP130 billion in GGR, which implies MOP50 billion in taxes.
However, with the ongoing downturn in the sector, this prediction is unlikely to be realized.
Gaming tax revenue was down by 4.8% year-on-year during the first quarter.
Data from the Financial Services Bureau shows that the city has collected MOP8.73 billion in fiscal revenue from direct taxes on gaming in the first three months of the year.
