Relaunch of commission tax affects gaming junket income in Macau

The new junket law caps the commission rate for VIP junkets at 1.25 per cent of rolling chip turnover, with junket operators required to pay a 5 per cent tax on their commissions each month.

The gaming association’s president confirmed to MNA that the commission tax, which was waived by the SAR government previously, had been reinstated starting from January.

The industry insider stressed that given the difficult business environment of the gaming junkets, the re-imposition of the 5 per cent tax will have a negative impact on their earnings.

“We certainly hope that the government will exempt this tax. Now gaming junkets’ revenue is falling day by day, and our profits will go even lower after this tax was reintroduced, such a move will for sure affect us,” Kwok said.

Regarding the prospects of junket promoters, the president stated that it was difficult to predict the future as the new gaming law and regulations came into force not long ago, and they need more time to observe the future holds.

Meanwhile, he pointed out that the industry was seeing a positive recovery forming after Covid restrictions and preventions were lifted in January.

“Although the scale of the market does not rival what it was, the junkets have seen an upward trend in business after ‘the end of the pandemic’, and the reopening of borders between Hong Kong and Macau has provided great help to the growth of revenue.”

Macau reported January gross gaming revenue of MOP 11.6 billion (US$1.4 billion), an increase of 82.5 per cent year-on-year.

Morgan Stanley analysts assumed 15 per cent of the Jan-2023 gaming revenue came from VIP segments, and at this run rate level, the industry should be making positive EBITDA and FCFE.

Brokerage JP Morgan highlighted in a recent report that although the market said the number of visitor arrivals was “disappointing”, the pace of recovery for casino patrons was faster than visitation figures, and gaming revenues recovered even faster than casino patron figures.

Macau welcomed some 451,000 tourist arrivals during the seven-day Chinese New Year Golden Week, between January 21 and 27. The figure signals a three-fold jump (297 per cent increase) from last year, however it still only accounted for 38 per cent of what was recorded in the pre-pandemic 2019 Chinese New Year Golden Week.

By Therese Tu