\nHoward Stutz, Las Vegas Review-Journal \u00b7 January 19, 2015 at 3:11 pm<\/p>\n
\tA Chinese government official is hinting at a potential gaming tax increase ahead of license renewals for Macau\u2019s casino operators.<\/p>\n
\tA Hong Kong-based gaming analyst said Monday the comments \u2014 reported by several Chinese media outlets \u2014 was the first evidence that a government review of Macau\u2019s gaming industry will be linked to any gaming concession renewal talks.<\/p>\n
\t\u201cThis will elevate policy overhang on the sector as the uncertainty on concession will add further risks to Macau investors in addition to recent gaming revenue slowdown and crackdown on the junket system,\u201d Macquarie Securities gaming analyst Janie Zhou told investors in a research note.<\/p>\n
\tThe move would come as the Macau\u2019s casino market has experienced seven straight monthly gaming revenue declines, culminating with December\u2019s 30.4 percent dip \u2014 the market\u2019s largest-ever single month drop.<\/p>\n
\tMacau\u2019s 35 large and small casinos saw gaming revenue fall 2.6 percent in 2014, the region\u2019s first-ever annual decline.<\/p>\n
\tMacau casinos pay a tax rate of 39 percent on gross gaming revenue \u2014 35 percent directly to the government with the remainder for various community efforts.<\/p>\n
\tIn an interview with reporters over the weekend, Macau\u2019s Secretary for Economy and Finance Lionel Leong Vai Tac said the government would explore a potential change in gaming tax rates after conducting a \u201cmid-term review\u201d of the industry.<\/p>\n
\tMacau has six gaming license holders. The 20-year concessions begin expiring in 2020. Zhou told investors a decision on new licenses was likely to be made before Macau Chief Executive Fernando Chui\u2019s term expires in December 2019.<\/p>\n
\tThree Nevada companies \u2014 Las Vegas Sands Corp., Wynn Resorts Ltd., and MGM Resorts International \u2014 operate casinos in Macau and are currently expanding their holdings with new developments in Macau\u2019s Cotai Strip region.<\/p>\n
\tMGM Resorts\u2019 concession expires in 2020. The concessions of Las Vegas Sands and Wynn Resorts come due in 2022.<\/p>\n
\tSpokesmen for Las Vegas Sands and MGM Resorts declined comment on the report.<\/p>\n
\tZhou said the Macau government vowed to conduct a thorough review of the gaming industry this spring following a December visit by China President Xi Jinping to commemorate the 15th anniversary of Macau\u2019s handover from Portugal.<\/p>\n
\tThe Chinese leader noted \u201cdeeply rooted conflicts\u201d between the Macau gaming industry\u2019s dominance and its people last month.<\/p>\n
\t\u201cAlthough highly uncertain at this point, a potential outcome on concession renewal could range from no change to an increase in gaming tax, or even re-tendering of the current six-concessionaire structure,\u201d Zhou wrote.<\/p>\n
\tMacau\u2019s casino industry has suffered since June. A crackdown on corruption by the Chinese government has focused on junket operators. The junkets bring high-end baccarat gamblers to the casino\u2019s ultra-exclusive private gambling rooms, but several operators have been linked to Chinese organized crime triads.<\/p>\n
\tThe crackdown has scared away high-end business, which was largely responsible for Macau\u2019s record $45.2 billion gaming revenue total in 2013.<\/p>\n
\tMacau produced $44.1 billion in gaming revenue in 2014, a figure that is still more than seven times the amount of annual gaming revenue produced by Strip casinos.<\/p>\n
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