Macau has announced new friendly restrictions for licensed casinos.
Next year’s earnings standards will be the same as in 2022, which should have given operators a sigh of relief as they attempt to recover from Covid-19 losses.
The Macau government has announced new gaming industry restrictions that operators must comply with from the first year of the upcoming licensing period. So in 2023, China’s Special Administrative Region (SAR) will allow licensed gaming companies to operate up to 6,000 gaming tables and 12,000 slot machines.
This will result in a minimum gross income of MOP7 million per year for each table and MOP300,000 per year for each slot machine. Therefore, starting next year, operators of the gaming mecca will have to meet revenue standards of at least MOP45.6 billion (~$564 million), similar to the level set for 2022, Bloomberg recently reported. I’m here.
Given that the future is still uncertain as the economy plunges deeper into recession, this low threshold is welcome for the operator. It is the first time such restrictions have been imposed on market players, and is not surprising given that the region is facing one of the toughest times in its history. With the bidding deadline looming, some of the six current licensees have expressed interest in being able to offer gaming services during the upcoming license period.
Standard values for ensuring “orderly and sound development”
The income cap is part of the recent gaming bill, which seeks to give authorities more powers to effectively supervise gambling businesses across Macau. There is already a pre-set minimum tax revenue, so any business that does not meet the threshold will have to make up by paying surplus tax.
The new rules are meant to encourage gaming operators to better manage their resources and figure out ways to generate more income from their licensed tables and slots. The current 40% tax rate is the highest in the global gaming industry, and there has been speculation for some time that the cap is too high for Macau’s crumbling gaming scene.
Macau Earnings Falling After Pandemic
Macau’s gambling income has been sluggish since the Covid-19 pandemic began. And just as most markets, including Macau, began to recover from post-pandemic losses, the Chinese government began cracking down on the industry. Just as many markets, including Macau, began to recover post-pandemic losses, the Chinese government began cracking down on the industry, imposing some of the toughest rules on operators in the global gaming industry, resulting in Macau losing billions. It suffered a dollar loss in revenue.
Furthermore, measures are being taken in line with President Xi Jinping’s reform policy and the zero cobit policy. The recent outbreak of the novel coronavirus and the government-mandated lockdown to curb the virus forced casinos to close for 12 days, in part. A report on Macau’s total gaming revenue for the second quarter of 2022 revealed a decline of 52% quarter-on-quarter and 67% year-on-year compared to 2021. The first half of 2022 is also down 38% year-on-year.
Restrictions on cross-border travel for gambling tourists from mainland China and a new bill to eliminate junket operations have also had a major impact on player start-ups. As a result, the entire gaming revenue stream has been hit hard.
Experts estimate that the earliest recovery in the southern China region will be at the end of the third quarter or the fourth quarter. However, there are also projections that it will take much longer than that, and it could be as early as 2023 before operators with permits are required to meet the set targets. Macau casinos are reportedly losing as much as $600 million every month.
What does the future hold for the former world champion?
To make the game fair for Macau’s concessionaires, the final amount paid to the government will be calculated based on how many tables and machines are used throughout the year. However, operators who fail to meet the minimum GGR will have their tables and machines taken over by the Secretary of State for Economy and Finance.
Either way, the market is apparently fighting hard to reclaim the gambling capital of the world. But on the other hand, investors still seem to be wondering if it’s worth investing now or if they should wait a little longer for the currently bearish market to show signs of recovery again.
Sin City, Nevada, which had a fraction of Macau’s GGR before the pandemic, has now overtaken the ‘Las Vegas’ of the East, and its revenues aren’t likely to wane anytime soon. But it’s been proven time and time again how unpredictable governments can be, so that decision remains in the hands of potential investors.