Macau government sets number of gambling tables and machines for new concessions

The minimum annual gambling revenue for the purposes of Article 20 of the new Macau gaming law per table has been set at MOP$7 million and the minimum annual gambling revenue per gaming machine is MOP$300,0000. The Chief Executive made the announcements in the Macau Gazette. The Chief Executive pointed out that according to the Gaming Law, “the total number of gaming tables and gaming machines to be granted for new gaming operations starting from early next year will be capped according to the actual number of gaming tables and gaming machines in operation in Macau.”

“If the average gaming revenue of concessionaires’ gaming tables or gaming machines does not reach the lower limit, concessionaires shall pay a special premium equal to the difference between the average gaming revenue of the concessionaires’ gaming tables or gaming machines and the lower limit.”

The Government noted that “the special premium is to encourage the grantee to make good use of the approved gaming tables and gaming machines.”

If 6,000 gaming tables are approved at a minimum annual gambling revenue per table of MOP$7 million, this implies annual gambling revenue from gaming tables of MOP$42 billion minimum. For 12,000 gaming machines at the minimum annual gambling revenue per machine of MOP$300,000 implies a minimum annual gambling revenue from gaming machines of MOP$3.6 billion. The total minimum gambling revenue for both gaming tables and machines would therefore be MOP$45.6 billion.

However, Macau’s GGR from January to July this year was only MOP$26.7 billion. At this prevailing run rate, the GGR for 2022 would be MOP$45.8 billion, only 0.4% above the minimum revenue announced today. This mean the Chief Executive has used almost exactly the GGR to date for 2022 as the minimum requirement for 2023.

During 2022 Q2, which was heavily affected by the pandemic, Macau’s GGR was only MOP$8.5 billion. Were Macau to suffer this level of business – admittedly close to a worst case scenario – it would imply an annual GGR run rate of MOP$34.0 billion, which would increase the effective rate of special gaming tax from around 40% to around 54%, a devastating result for Macau’s six casino concessionaires, and predicted as a possibility (to the precise amount of 54%) in a prior IAG article.

However, the government announced in May this year that the Chief Executive would have the power to alter the minimum revenue requirements depending upon prevailing economic conditions.

Macau’s gross gaming revenue in 2019, 2020 and 2021 was MOP$292.5 billion, MOP$60.4 billion and MOP$86.9 billion respectively.

Pierce Chan