Macau’s Secretary for Economy and Finance Lionel Leong Vai Tac (pictured) said there is no need to cut government spending even though June’s casino gross gaming revenue (GGR) is likely to be the worst monthly tally in nearly five years.
Speaking to reporters on Monday, Mr Leong said June GGR might drop to between MOP16 billion (US$2 billion) and MOP16.5 billion. That figure would represent a 41.2 percent year-on-year fall and the worst monthly tally since September 2010, when the city’s casinos collected MOP15.4 billion in gross revenue, according to official data.
But revenues for the past week this June “have improved sequentially”, said Wells Fargo Securities LLC analyst Cameron McKnight.
“Average daily revenues for the past week are expected to be around MOP550 million versus MOP514 million for the week before,” Mr McKnight said in a note on Monday, adding that he expects June’s GGR to decline between “39 percent and 40 percent year-on-year”.
The official data for June is due to be released on Wednesday by Macau’s gaming regulator, the Gaming Inspection and Coordination Bureau.
On Monday, Mr Leong said that even with a MOP16-billion figure for June’s GGR, the average for the first six months of 2015 would still be above MOP20 billion. As such, he added, there would be no immediate need for any austerity, reported the city’s public broadcaster TDM.
Accumulated GGR for the first five months of 2015 stood 37.1 percent lower than in the same period in 2014, at approximately MOP104.3 billion.
Mr Leong however reiterated the warning made in April, that the city’s government would have to consider spending cuts if Macau’s monthly gaming revenue keeps falling. But on June 18 he pledged that the annual cash handout to each Macau resident would be maintained, along with spending on social welfare.
In a note earlier this month, Japanese brokerage Nomura said it would be considered a “warning” to the industry if monthly casino revenue in Macau dips much below MOP18 billion.
The Macau government surplus is down by 54.9 percent year-on-year in the first five months of 2015 to MOP25.28 billion. Much of the city’s public revenue comes from taxes on gambling, levied at an effective rate of 39 percent of the gross.
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"The [Macau] government has a lead in this subject in regards to what should be done after the [gaming] concessions expire. We will be first listening to what the government will say”
Ambrose So Shu Fai
Vice-chairman and chief executive at Macau casino operator SJM Holdings