GAMING TAX REVENUE TO DROP 10PCT IN 2015

2014/11/20

From:Macau Business Daily

Francis Tam said this week that the government expects to collect MOP115 billion through direct gaming taxes in 2015, a performance, he claimed, would be in line with this year. But in 2014, this tax will generate much more than that: MOP130 billion.

The Government will suffer a 10 percent decrease in gaming tax revenue next year, a different scenario to the one announced this week by Francis Tam, who’s expecting a flat performance from the revenues generated by casinos for the public coffers.
The Secretary for Economy and Finance said Tuesday that the government here expects to collect MOP115 billion from its direct tax on gaming in 2015, “maintaining” the level of this year. Tam’s words probably were referring – or comparing – to the figures included in the 2014 budget, in which the expected gaming tax should reach MOP117 billion this year.
However, according to Business Daily calculations using official data and the latest estimations from investors, the government will amass much more than that. At least MOP130 billion is likely to enter the public accounts in 2014
through direct gaming tax charged to casinos (35 percent of gross revenues made by all operators here).
As at October, the government had already collected MOP110 billion in gaming taxes, the latest data from the Financial Services Bureau shows. In the two months left until the end of the year, public coffers will receive an additional MOP18 billion in revenues from direct gaming taxes, pushing the total revenue to almost MOP128 billion.

Worse than flat

The actual consensus among investors is that gaming revenues in Macau will drop 20 percent in November and December. Last year, casinos in Macau generated MOP30 billion in November and MOP33 billion in December in revenues, according to data from the Gaming Inspection and Coordination Bureau.
If market predictions materialise, gross gaming revenues here will total MOP51 billion in the last two months of the year. This means that the government will collect MOP18 billion from this sum (the 35 percent tax) that will be added to the amount of MOP110 billion amassed from January to October.
With an expected MOP130 billion in direct tax from gaming in 2014, the MOP115 billion figure advanced by Mr. Tam this week, means that the revenues from this tax will not stay flat but decrease by 10 percent.
Despite the turbulent year and the five straight months of gaming revenue decline (likely to be seven by December) the government will close the year with more money from gaming than in 2013. According to the Financial Services Bureau, last year revenues from the casino tax amounted to MOP126 billion. Today, authorities make twice the money charging casinos than in 2010 (MOP65 billion) and three times more than in 2009 (MOP42 billion).
The government was also forced to revise down its numbers. Mr. Tam said this week that he’s working on the 2015 budget with a monthly gross gaming revenue estimation of MOP27.5 billion (using the average of revenues from June to October) versus the previous MOP30 billion. The budget for 2015 was described by the Secretary for Economy and Finance as “conservative”. In Macau, the gaming industry generates 95 percent of its direct taxes and 80 percent of all government revenues.
The outlook for Macau’s gaming industry in 2015 is also becoming bleak as the data from the sector continues to get bad press. The consensus among investors is that gaming revenues will stay flat this year or suffer a small decrease in the low single-digit range.
For 2015, the market is expecting another decline in gaming revenues between 0 to 4 percent. Like 2014, next year will probably be divided into two opposite stories in terms of revenue performance. The first half will continue to see a drop in gaming revenues in the double-digit range, with the first three months the worst. For the second half, investors predict a recovery due to a better comparative effect with 2014 and also more revenues arriving with the opening of several new properties in Cotai.

Copyright@Macau Business Daily