Falling Gaming Revenue Puts Macau Budget at Risk
Earlier this week, the Chief Executive of Macau, Ho lat Seng, warned that the enclave could face a budget shortfall if monthly casino earnings drop below 15 billion patacas ($1.88 billion).
LISTEN TO THIS ARTICLE:The warning came after lower-than-expected revenue figures were published for the first quarter. Speaking to local lawmakers, Ho drew attention to the risk of a budget deficit if future gaming revenues do not meet the target figures.
Gambling Accounts for 80% of Tax Income
As the only region in China where casino gambling is legal, Macau's economy is deeply dependent on its gaming sector, which accounts for around 80% of public tax income. A former Portuguese territory until its return to China in 1999, Macau now functions as a special administrative region.
The imbalance in our fiscal structure is serious and we must maintain a strong sense of crisis awareness. Macau is a small city, yet our regular expenditure is substantial and it will continue to grow unless we face up to extreme circumstances.
Analysts have also pointed to broader economic issues, such as slowing growth in China and worldwide, as key factors weighing on Macau’s casino performance. The impact of recent U.S. tariff announcements, especially those affecting Chinese goods, adds further uncertainty.
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Warning from JP Morgan
JP Morgan analyst DS Kim, who is based in Hong Kong, noted that Macau could experience “second-order impacts” due to anticipated declines in demand from Guangdong, China’s main export region, as well as the weakening yuan. He now projects a worst-case scenario where Macau’s gaming revenue could fall by as much as 10%, a reversal from earlier forecasts predicting modest growth.
In the first quarter, Macau’s gaming revenue totaled 57.7 billion patacas, a 0.6% increase from the same period last year, and averaged 19.2 billion patacas monthly. This still falls short of the government’s annual goal of 240 billion patacas, or 20 billion per month.
Authorities in both Beijing and Macau have directed the city’s six licensed casino operators, Sands China, Wynn Macau, SJM Holdings, MGM China, Galaxy Entertainment, and Melco Resorts, to diversify their income streams and reduce reliance on gaming revenue.
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