GGRAsia – Macau GGR tax cut idea tied to China outlook: brokerage

Macau GGR tax cut idea tied to China outlook: brokerage

May 23, 2022 Newsdesk Latest News, Macau, Top of the deck

Brokerage Sanford C. Bernstein Ltd says the “negative outlook” for Macau’s inbound tourism from mainland China is a factor in the city’s government suggesting it might be willing to offer a cut in tax levied on gaming, if local operators are eventually able to bring in foreign players.

“The negative outlook has led to the Macau government taking initiatives to encourage casino operators to attract foreign customers – through a potential GGR [gross gaming revenue] tax cut – and beginning May 27, to firstly allow Portuguese non-resident visitors to enter Macau, though a 14-day quarantine is still mandatory,” observed the institution in a Monday memo.

The announcement on Portuguese nationals, made last week, was “raising some hopes that Macau may eventually reopen travel to international visitors,” added analysts Vitaly Umansky, Louis Li and Shirley Yang.

Under Covid-19 countermeasures, foreigners without Macau ID are mostly barred from entering Macau, a rule in place since March 2020. Some exceptions – such as the one just announced; and entry of expert professionals on public-interest grounds – are allowed.

Sanford Bernstein noted regarding the mainland, the only place to have a largely quarantine-free travel arrangement with Macau: “China’s reported Covid cases have now come down to about 3 percent of the peak level – in mid-April – at the cost of prolonged lockdown in Shanghai as well as escalated Covid measures in Beijing and many other cities, and the Chinese government has reiterated strict Covid border policy and restrictions on non-essential travel.”

Referring to GGR performance during a week-long holiday in China surrounding Labour Day on May 1, compared to average daily GGR for May 16 to 22, the Sanford Bernstein analysts stated: “There was some demand recovery after the post-holiday seasonality/slowdown, but the [mainland’s] Covid travel impediments and potential visa control on frequent gamblers may continue to impact near-term visitation and GGR.”

Macau average daily casino GGR doubled for May 16 to 22, to MOP100 million (US$12.4 million) compared to MOP50 million daily for May 10 to 15, said the brokerage’s Monday note, citing its own channel checks.

They added the average daily rate for Macau GGR for May 1 to 22 was still “-85 percent versus May 2019 average and -62 percent versus May 2021”.

The May 10 to 15 GGR data had been Macau’s “worst” performance “since October 2020”, i.e., the point at which China “resumed IVS [individual visit scheme travel]” for mainland residents wishing to journey to Macau, the institution had said in a memo last week.