Macau CE: Slumping GGR could mean budget deficit
In comments before the Macau Legislative Assembly on 14 April, Sam reminded lawmakers that monthly GGR must stay at or above MOP15 billion (£1.4 billion/€1.65 billion/$1.88 billion) for the local government to break even.
If it slips below that level, “[W]e would immediately be running a budget deficit,” said Sam.
From January through March, GGR rose just 0.6% year-on-year, for a monthly average of MOP19.2 billion. To meet government expectations of MOP240 billion for the year, gaming must generate MOP20 billion a month.
“The imbalance in our fiscal structure is serious” and demands “a strong sense of crisis awareness”, Sam added. “Macau is a small city, yet our regular expenditure is substantial – and it will continue to grow unless we face extreme circumstances.”
Concessionaires responsible for Hengqin investments
Sam wants stepped-up efforts to diversify the local economy, “focusing on sectors such as healthcare and finance to build a more sustainable fiscal foundation for Macau”.
The government also plans a review of non-gaming contributions by the city’s six casino concessionaires. As a condition of their licences, operators are required to invest MOP130.4 billion in non-gaming attractions and infrastructure, not just in Macau but on the neighbouring island of Hengqin.
“We will… guide the concessionaires to invest more resources in priority industrial projects in Macau and Hengqin, as well as in brands that support the enhancement of Macau’s overall global competitiveness,” said the chief executive, according to Macau Business. “The public is paying close attention to what qualifies as non-gaming development. The government shares this concern and will establish clear criteria for standards, evaluation and assessment.”
The New York Times has reported that China is “merging and blurring the boundaries between major southern Chinese cities as well as Hong Kong”. For example, shortly before President Xi Jinping’s December visit to Macau, casino operator SJM Holdings said it would acquire nine floors of office space in Hengqin and turn it into a three-star hotel.
Effect of US-China trade war will be “minimal” in Macau
Meanwhile, the accelerating US-China trade war should have a “minimal” effect on Macau, according to José Carlos Matias.
In a recent editorial, the Macau Business director pointed out that Macau’s “overwhelmingly service-based economy” relied on the US for just 5.5% of exports last year.
He agreed with Sam that concerns are “understandably mounting in the face of the SAR’s conspicuous reliance on gaming”. In 2024, he noted, gaming taxes still accounted for 80.5% of the government’s total revenue, only slightly less than the 84.8% recorded in 2019.
“And come the first day of each new month, all eyes are on the single figure that truly matters for the city’s wealth and public finances: the monthly GGR tally.”
The city cannot be fully insulated from “surrounding patterns and trends”, he added. However, despite the “disruptor-in-chief” in Washington, Matias wrote, “the glass is still half-full”.