The Macau government is being cautious about next year’s budget due to the slowdown in casino gross gaming revenue (GGR), the city’s Chief Executive Fernando Chui Sai On (pictured) admitted on Tuesday. “We have drafted a more cautious budget for 2015,” Mr Chui told reporters after meeting with legislators.
Macau’s Chief Executive said the fall in casino revenue “was expected”, following the rapid growth the industry has seen in previous years. “We were not surprised [by the slowdown in GGR],” Mr Chui said, adding that there are other encouraging signs for the economy, like the growth in the number of tourists.
Casino GGR for October slipped a record 23.2 percent year-on-year, according to official data. It was the fifth consecutive month that GGR has declined judged against year prior periods, the most sustained retreat since 2009.
The city’s aggregate GGR for the 10 months to October 31 is 2.3 percent up on the same period a year ago to MOP303.97 billion (US$38.1 billion). Japanese finance house Nomura last month said casino revenue in the city would probably drop 2 percent for full-year 2014.
The government has forecast total public revenue of MOP145 billion for 2015, excluding revenue raised by special bodies such as Macao Foundation. That is up 2.7 percent from the public revenue tally expected for 2014, but nonetheless a much smaller increase than in forecasts for previous years. From 2012 to 2013, the government said it expected its revenue to increase 11.6 percent, from MOP115.2 billion to MOP128.5 billion. The administration had forecast a 9.9 percent increase in revenue from 2013 to this year’s budget.
The contribution of direct gaming taxes as a percentage of all public revenue has been increasing in recent years.
The Macau government levies a special gaming tax on casino GGR at the rate of 35 percent. It also collects about 4 percent of the gross in indirect taxes for social and promotional purposes, as well as a levy on each gaming machine, live dealer table and VIP room.
Direct taxes from gaming brought in 84.2 percent of the Macau government’s total revenue in the first nine months of 2014.
The government said it expects to collect MOP123.5 billion in direct taxes this year, with MOP117.8 billion coming from direct taxes on gaming.
The draft budget announced on Tuesday by Mr Chui shows that in 2015 the government expects to collect MOP125 billion in direct taxes. The document however does not detail the amount of taxes the administration is expecting from direct taxes on gaming – the figure is to be revealed when the Secretary for Economy and Finance discusses the draft budget with legislators. The government has not yet announced a date for that.
Mr Chui is to submit his policy address for 2015 to the Legislative Assembly in the first quarter of next year, after the new government is sworn in, in December.
On Tuesday, the Chief Executive also said the government will conduct a study to assess the development of the gaming industry, ahead of the negotiations to renew the licences of the six Macau gaming concessionaires.
“We have to conduct a study about the gaming industry and take into consideration if the concessionaires have followed the terms set in their contracts,” said Mr Chui. “We have to look at all features of their projects, including gaming and non-gaming elements, in order to speed up the economic diversification [of Macau],” he added.
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”We do not believe that reopening the advance notice nomination deadline [for board directors] is appropriate or justified”
Daniel Boone Wayson
Chairman of the Wynn Resorts board of directors