As the world’s gaming capital, Macau, a special administrative area of China, is striving to recover from the negative impacts of the health crisis. But instead of giving up, the authorities are coming up with more and more plans to get out of this mess. Some local concessionaires will receive additional gaming tables and slot machines at the start of the new year, which also marks the start of the new concession term. The financial impact of this distribution will differ across the board.
The estimated impact on annual income from increased gambling facilities
Starting on January 1, 2023, Macau will enter a new concession period for the gambling industry. The government has already declared a quota for gaming tables and slot machines. This news comes after it was revealed the impending concession would limit the number of gaming tables and machines. Both of these numbers were meant to be cut in half, to 12,000.
At the start of 2022, the head of the local regulatory body emphasized that the total number of machines and tables allocated under the new concession would be established based on the number of those already in operation in Macau, as required by the Gambling Law. There is a slew of fees and levies associated with gambling establishments in this Chinese administrative city.
The sum of all sales makes up 39% of the business’s overall income. Macau’s new Gaming Law, Article 20, sets the floor for yearly gaming income at $870,000 per table, with a floor of $37,500 per table.
A chance for municipal officials to meet specific requirements
The 6925 tables allowed during the current concession period, which will conclude on December 31, will be reduced by 13% as a result of this policy. Slot machine revenue, which was 12,387 as per the most recent count at the end of September 2022, will decrease by 3% as a result.
According to local regulations, a total of $5.7 billion could be generated from gambling if 6,000 gaming tables with a minimum annual turnover of MOP7 million and 12,000 machines with a minimum annual turnover of MOP300,000 were permitted.
A allocation with uncertain effects on successful vendors’ bottom lines
Since Macau had to modify its gross revenue level downward to $4.83 billion at the end of last November, the estimated value may be based on the level of gross revenues earned in 2022. The recent move by Macau authorities to open gaming facilities and offer a tax credit for operators should help bring 2022 earnings back around the expected amounts by attracting more international visitors during the vacations.
Five out of Macau’s six concessionaires—SJM, Melco, Wynn, GEG, and Sands—may be impacted by the stated allowances. Nearly 1,100 tables have been lost by the latter, with 743 tables gone from SJM alone as a result of the closure of many satellite casinos in Macau. MGM, meanwhile, stands to benefit by 36 percentage points, or 198 extra tables, compared to its previous allocation. However, it seems that GEG, MGM, and Wynn benefit from the way slot machines are divided up among the many casinos. The number of slot machines at GEG will increase by 31%, whereas at MGM they will decrease by 31%. However, Sands and Melco will operate at 8% and a 6% drop in slot count, respectively, for the next calendar year.