Kwok Chi Chung, the president of the Macau Association of Gaming and Entertainment Promoters (MAGEP), has stated the Macau government’s decision to impose a 5 percent commission tax on gaming junkets will make it more difficult for the sector to operate.
According to the new junket regulations the maximum commission rate for VIP junkets has been set at 1.25 percent of rolling chip turnover and junket operators must pay a monthly tax of 5% on their commissions.
The commission tax has been reintroduced from January after previously being waived by the SAR administration. The president of the gaming association, who spoke with Macau News Agency, insisted that the re-imposition of the 5% tax would hurt gaming junkets’ profits, given the challenging business climate in which they are operating presently.
“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,” said Chung.
The president said that since the new gaming law and rules have recently been introduced, it was difficult to anticipate what the future might hold for junket promoters and that they needed more time to see it.
Speaking on the recent recovery of the Macau gaming industry, Chung said, “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.”
According to Morgan Stanley analysts, 15% of the gaming revenue in January 2023 came from VIP categories, and at this rate, the sector should be generating positive EBITDA and FCFE.
Another report by J.P. Morgan noted that the pace of recovery for casino patrons was faster than visitation numbers, and gaming revenues recovered even faster than casino patron figures despite the market terming the number of visitors as “disappointing”.
Recently, Macau, reported an 82.5% increase in gaming income year-on-year to 11.6 billion patacas ($1.4 billion) for January 2023 and welcomed around 500,000 visitors during the seven-day Lunar New Year holidays.