Macau casinos’ net debt could reach US$25bn this year, analysts say

Analysts at Morgan Stanley say this could be the figure if current travel restrictions remain in place.

Macau.- If Macau doesn’t reopen its borders soon, the city’s casino operators’ aggregate net debt could reach US$25m by the end of the year, according to a Morgan Stanley report. The figure would be five times that reached at the end of 2019 and 12 per cent higher than a “base case” scenario.

Morgan Stanley said: “If China’s travel easing gets delayed to the second half of 2023 Macau operator’s aggregate net debt could rise another US$2bn, to US$27bn by end-2023, by our estimates.”

On top of travel restrictions for Covid-19, Sanford C. Bernstein Ltd has reported that frequent gamblers to Macau have seen visas denied by Chinese immigration authorities. The situation has become so grave that Legislator Chan Chak Mo has said Macau is willing to consider reducing the gross effective tax rate on casino gross gaming revenue (GGR) by as much as 5 percentage points if casinos can attract players from outside China.

Mainland China continues to be the only country to have a largely quarantine-free travel bubble with Macau. However, authorities are evaluating a plan to allow selected non-residents to enter the city. Selected countries may be those where Macau residents have family members, are studying abroad, and where a large number of Macau professionals are required.

Macau gaming tax down 54% year-on-year in April

The Financial Services Bureau has reported that tax proceeds from gambling in April was MOP$1.48bn (US$183m), a decrease of 53.9 per cent year-on-year, from MOP$3.21bn (US$397n) in April 2021. Last month’s figure was also 50 per cent lower than the MOP$bn (US$371n) recorded in March 2022. 

For the first four months in 2021, gambling tax revenue was MOP$12.38bn (US$1.53bn). For the same period this year, revenue stands at MOP$10.21bn (US$1.26bn), a decrease of more than 17 per cent.