Macau game sales growth is expected to stagnate at 0% year-over-year in 2014 and decline 1% in 2015, according to a note from financial services firm Fitch Ratings Inc.
Macau’s economy and finance minister, U.N. Francis Tambac, told Macau’s legislative council on Tuesday that game tax revenues in 2015 were expected to remain flat year-on-year. He added that figure would account for about 80% of all government revenues in 2015.
Official data released this week showed the government collected $102.2 billion in direct taxes from gaming in the 10 months to Oct. 31 this year. Direct taxes from gaming accounted for 83.5% of Macau’s government’s total revenue in the first 10 months of 2014.
Macau imposes an effective 39% tax rate on casino gross gaming revenue (GGR), with 35% direct government tax and a number of taxes to pay for various community causes.
Fitch said in a report this week: “Fitch’s forecast reflects continued weakness in VIP businesses that appear to be flowing into the premium public sector.”
It added: “We expect weakness in Macau to continue into the first half of the year until Galaxy Entertainment [Group] and Melco Crown [Entertainment] open the Galaxy Macau expansion and Studio City respectively, and the negative VIP trends wrap up.”
By that point, Fitch said its model would show Macau Casino GGR’s quarter-over-quarter “roughly flat” growth rate of 15%-20% year-over-year by the first quarter of 2015 and about 5% year-over-year in the second quarter of next year.
The rating agency added: “After that, we are modeling bulk [game] growth of 5% to 8% and VIP growth of 2% to 4% sequentially, with growth expanding towards the end of the year.”
It states that 2015 “could look overly conservative if VIPs rebound to recent historical averages” (approximately 18 billion MOPs per month since 2011 compared to about 15 billion MOPs since June 2014)
However, it added that VIP’s rebound was “unlikely” due to a decline in the number of VIP table positions in the Macau market compared to 2013, macroeconomic headwinds in mainland China, including lower housing prices, stronger credit conditions and a crackdown on corruption in China.
Fitch also suggested that some VIP businesses are likely to withdraw from Macau due to the expansion of the Philippine gaming market. 안전한 카지노사이트
Macau CEO Fernando Tsui Sion said on Nov. 11 that he had budgeted “more carefully” for 2015 following Macau’s slowing GGR growth.