Macau Government Expects a 71% Year-on-Year Drop in Gaming Tax Revenues in 2020

Article by : Helen Dec 29, 2020

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Although October and November monthly gross gaming revenues were at their highest since April this year, the harm is done. The full-year results are still going to be depressing for the Macanese casino industry, as well as to the enclave’s government, because the businesses now have a lot less in taxes to pay this year.

On December 9, the Legislative Assembly passed the revised 2020 budget to reflect the realities of today’s Macanese economy. According to the proposed amendments to the budget, Macau’s authorities expect to receive 71.1% less in taxes imposed on gross gaming revenues compared to 2019 – only $3.28 billion (MOP29.4 billion).

The Legislative Assembly was a lot more optimistic in April when it passed amendments to the 2020 budget. Back then, it forecast a 28.9% year-on-year drop in tax revenues from gaming activities, which unfortunately seems too good to be true in retrospect.

To manage the undercut incomes to the budget, Macanese authorities have decided to take $1 billion (MOP8.1 billion) out of the reserve to cover the inevitable expenditures this month. It’s the second time Macau has to use the money from its reserves to balance out the deficit this year, the first one being in April.

So far, the gaming industry of the special administrative region has accumulated MOP52.6 billion in revenues throughout 2020 (roughly $6.6 billion), which is laughable compared to the almost MOP 270 billion (about $33.8 billion) in accumulated revenues the Gaming Inspection and Coordination Bureau of Macau reported for the first 11 months of 2019.

Despite the depressing figures, there is still hope the economy of the enclave is slowly recovering from the pandemic-induced drop in tourists. When mainland China lifted its ban on traveling to Macau in September, October’s gross gaming revenues went up by more than 300% compared to the month before that.

October was the first time since January that we’ve seen significant real business volumes and patronage. The patrons returning first to Macau are high-quality, high-frequency customers..

While it is a big silver lining, the road to full recovery is not likely to be a smooth and short one. The year-on-year comparisons still show staggering drops in monthly gross gaming revenues, between -70.5% in November and as low as -97% in July. Besides, there is no guarantee the coronavirus won’t get out of hand either in Macau itself, prompting a shutdown, or in mainland China, forcing it to issue another travel ban. The Legislative Assembly also passed the 2021 budget bill on December 16, which foresees using MOP26.6 billion (US$3.3 billion) from Macau’s reserve to cover the losses from diminished gaming tax revenues.

In 2021, Macau expects “a significant drop in revenues from the special gambling tax.” The enclave’s economy relies on it heavily when it comes to replenishing the budget: these tax revenues make up approximately 80% of the total budget income.

“The budgeted revenue for the 2021 economic year is not enough to satisfy the budgeted expenditure”, explained the Secretary for Economy and Finance of Macau, adding that “the economic situation will remain severe and needs a certain amount of time for its recovery.” Lei Wai Nong emphasized that Macau’s budget in 2021 “will continue to be […] in deficit, with the whole society having to be psychologically prepared to face this protracted war with regard to economic recovery”.

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