February GGR rebound so far better than expected
The city’s gross gaming revenue (GGR) is recording a rebound, with an estimated MOP1.9 billion in the first five days of February, as the city has been swarmed by visitors amid the significant easing of restrictions.
Brokerage firm J.P. Morgan remarked that such a figure represents a recovery of 45% of 2019 figures
The average daily revenue amounts to MOP380 million, slightly more with the daily average of MOP374 million in January.
Last month, the city’s casinos saw GGR surge 82.5% year-on-year to MOP11.6 billion as China’s reopening and the week-long Lunar New Year break sparked an influx of visitors to the gambling hub, fueling optimism that the region was finally shaking off its zero-Covid doldrums.
According to Morgan analyst DS Kim, “At this level, all operators (perhaps except SJM given the operating expense burden from Grand Lisboa Palace) should already and comfortably be printing positive free cash flow (FCF; i.e. EBITDA in addition to internet costs and maintenance capex).”
The MOP1.9 billion average for the first five days is considered to be “very decent” as the week-long New Year holidays have passed.
Meanwhile, Success Universe Group Limited, which owns a 49% interest of Pier 16 – Property Development Limited, which operates Ponte 16 Resort, is expecting gaming revenues to recover up to 60% of pre-pandemic levels, with the mass-market income fully returning to pre-pandemic levels.
The expectation also echoes JP Morgan’s projection that the mass-market GGR had recovered to 65-70% of pre-Covid levels.
New tax on VIP business
The government is reportedly placing a levy on junket operators that threatens to “kill” the casino hub’s once-thriving VIP business, industry insiders say, according to media reports.
Aside from the standard 35% tax on GGR, under the new rules, casino operators in Macau are due to pay an additional 5% floor “rent” fee.
The city has started enforcing a 5% tax on the commissions that casino operators pay to junkets.
This additional payment is applicable to all junket operators on a monthly basis and is expected to significantly impact the sector.
“The tax had always been waived in prior years,” one junket boss, who asked to remain unnamed, told Nikkei Asia. “They are now enforcing it, which will kill our income.”
These gaming promoters were required to pay MOP1.50 million to have their licenses renewed from January 1. The day marks the gaming sector’s entry into a new year, following the largest gaming law overhaul.
