The government-set annual minimums for gross gaming revenue (GGR) per Macau casino gaming table and per slot machine are “affordable” and the “chances” for casino operators to be faced with “additional costs” as a result of the policy details announced on Friday are “slim”, says industry veteran Kwok Chi Chung.
Mr Kwok, president of the Macau Association of Gaming and Entertainment Promoters, made the comments to public broadcaster TDM, in a report aired on Saturday.
On Friday, the Macau government had issued information, via the city’s Official Gazette, about the annual GGR minimums, due to take effect from January 1, to coincide with new, 10-year gaming concessions.
The minimum annual limit of “gross income” to be generated from each gaming table is MOP7 million (US$866,097); and that of each gaming machine is MOP300,000.
A separate dispatch said the maximum number of gaming tables to be operated in aggregate by all gaming concessionaires in the city is 6,000. The maximum number of gaming machines to be operated across all gaming concessionaires is 12,000.
Mr Kwok said the requirements could help lead a “healthier” development of the industry than hitherto, and also “better control” the employment outlook for the sector.
Before the numbers were published, some analysts had expressed concern that if the annual GGR minimums per table and per slot had been set too high then it would have cost the industry extra money. That is because the government had already said that if the sector failed to meet minimum levels, then it would have to make up the difference in terms of the tax from gaming that the city would otherwise have expected to receive.
That potential liability came against the backdrop of a Macau operating environment where casino operators have been burning cash due to travel and social restrictions linked to containment of Covid-19 on mainland China and in Macau.
“The minimum GGR target was much better than feared,” said a Friday note from JP Morgan Securities (Asia Pacific) Ltd.
“It turns out there wasn’t much to worry about: the target amount appears (very) low and feels like just a formality to us,” wrote analysts DS Kim and Livy Lyu.
The minimums proposed by the government were “even below the levels we saw last year: MOP13 million and MOP0.4 million” for tables and slots respectively, “let alone pre-Covid levels,” which had been more than MOP40 million on average per table, and about MOP1 million yearly per slot, noted the JP Morgan team.
“This seems like a very low bar to clear, even if we assume a very gradual recovery in demand,” they added.
Regarding the cap on table and slot numbers, JP Morgan stated: “There is… enough excess capacity in the market in our view, even after demand fully recovers to pre-Covid levels and beyond.”
