Macau’s 2022 GGR Predicted To Be Half of 2019’s Performance

Posted on: November 4, 2021, 11:48h. 

Last updated on: November 29, 2021, 09:40h.

Erik Gibbs Read More
Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

Macau’s attempts at recovering from the damage caused by COVID-19 are going to take longer than expected. According to the government’s updated budget, the city’s gross gaming revenue (GGR) in 2022 is expected to be MOP130 billion (US$16.2 billion). That’s less than half of what Macau earned in full-year 2019 (MOP292.5 billion), prior to the onset and spread of the COVID-19 pandemic.

Macau, casino, corona, COVID
A masked man walks near Casino Lisboa, in Macau. Macau’s casino market continues to see signs of life as the city works to improve the number of locals vaccinated against COVID-19. (Image: Billy HC Kwok/Bloomberg)

According to the statement on the fiscal budget for next year, the city will likely experience “great uncertainty” in macroeconomic circumstances and continue to face a deficit.

Gaming tax income, which is the largest source of fiscal income for the city, was estimated by the government to be $45.5 billion (US $5.67 billion) by 2022.

Macau, which has had difficulty gaining traction this year, also stated its allocation in its budget announcement. It noted that the city would use its accumulated fiscal reserves for support of expenditures on social welfare and infrastructure projects for next year. This was based on the assumption that the city would likely suffer a fiscal deficit relative to its income and its public policy commitments.

More Relief on its Way

While there still are COVID-19 concerns in Macau, the city is doing almost everything possible to return to normal. Ho Iat Seng, Macau’s Chief Executive, stated Wednesday that he hoped that the city would achieve an 80% vaccination rate within the next few days.

Speaking during a gathering in the city of Hangzhou in mainland China, Ho stated that the Macau vaccination rate has been increasing. He added that the city is a safe and healthy destination that could attract more tourists. Some of the previous tourism has been returning, but only in small spurts.

The Macau Novel Coronavirus Response Centre and Coordination Center held a press conference on October 28. At the time, it was reported that 456,368 Macau residents had been vaccinated by that afternoon. 108,777, however, had not yet received their first dose.

China is currently the only country that has a generally quarantine-free travel agreement with Macau. People arriving from 16 provinces, regions, or municipalities on the mainland must be quarantined upon arrival. Macau’s neighboring province of Guangdong, routinely the biggest single source of tourism for the city, is not currently on the inbound-quarantine lists.

On September 29, Macau’s leader stated that Guangdong had been in discussions with Hong Kong about easing travel restrictions between the two countries. He stated that Macau’s travel rules were likely to be relaxed “in tandem” with Hong Kong once this happened.

Although technically the border between Macau & Hong Kong isn’t closed, travel restrictions, including quarantine rules, make it impossible to travel between these two places for short periods of time.

Macau’s Casino Plans Still in Limbo

The ongoing COVID-19 issues, combined with bad weather, have made it difficult for Macau to make progress with its casino market. Operators expect to have their licenses reissued next year. However, there are still a lot of questions that have not been thoroughly addressed. Macau just laid out its plans for the new legal framework for the casinos, but whether everything will be in place for the issuance of the licenses by next June remains a mystery.

It’s likely that all six licensed casino operators will remain in place, but MGM China Holdings wanted to reassure its investors that its future in the city is solid. MGM China Chairman Bill Hornbuckle said on Wednesday that the company is “highly optimistic” about its continued success in Macau.

Hornbuckle, who also serves as CEO and president at MGM Resorts International, made his remarks during an earnings call for MGM Resorts. He said that he wasn’t sure if the process to renew the six city casino concessions would take place before June next year.

“We will continue to work with the government, and we are highly confident in ultimately getting our license renewed. Ongoing discussions with the government give us greater confidence in our belief that the process will be both judicious and fair,” he said.

The Macau government previously stated that there would be a new public tender process in connection with the expiry of the current licenses in 2022. However, Macau’s gaming laws have to be amended before such a process can take place. In the meantime, Macau’s gaming law permits the extension of existing licenses up to five years beyond the original 20-year term.

The Macau government conducted a public consultation to collect opinions from the operators and general public as part of the revision process for the gaming law. The public consultation period was from September 15 to October 29. MGM China confirmed that it had submitted a written statement to the government, along with all concessionaires, during the conference call.

The MGEMA Wants Formal Inclusion

The Macau Gaming Equipment Manufacturers Association (MGEMA), an organization representing the interests of gaming and technology suppliers, has asked for revisions to Macau’s gaming law to allow satellite casinos to be granted legal status.

After being grandfathered into existing gaming laws, the future of Macau’s satellite casinos – Macau-based operators operating under the license of a Macau concessionaire — has been a matter of contention for many years. However, their status was a significant omission in the proposed amendments to gaming law outlined in September by the government. They were also not discussed during the four public consultation sessions held by the Gaming Inspection and Coordination Bureau (DICJ, for its Portuguese acronym) last week.

Macau has 18 satellite casinos in operation. Of these, 14 are licensed by SJM. Three operate under Galaxy Entertainment Group’s license, and the other is under Melco Resorts & Entertainment.

According to information obtained by Inside Asian Gaming, the MGEMA wants satellite casinos to be given legal status to assist in the development of the city’s gaming industry. The proposal reportedly suggests that, because the assets of the 18 satellite casino casinos exceed MOP$50 million (US$6.2billion) and have led to job creation over the past 20 years, the properties have contributed significantly to Macau’s economic growth and should be recognized.

There has been some talk that the satellites would no longer be able to operate under the existing relationships once the new gambling laws are introduced. However, this would likely do more harm than good to the city’s economy and long-term growth plans.