Macao Holds Out a Possibility of Gaming Tax Cut Up to 5%

Macao is considering a cut of gaming tax up to 5%, if casino operators can demonstrate efforts to bring in players from outside of China, according to media reports including GGR Asia. We think this signals the government’s willingness to support the city’s gaming sector amid the challenges of China’s crackdown on cross-border gambling and ongoing COVID-19-related travel restrictions. The gaming sector not only contributes about 80% of Macao’s fiscal income, but is also the most important employer in the city. However, given the pandemic-related travel restrictions are still in place in Macao, and competition from regional markets is high, particularly after Singapore and Philippines have eased travel restrictions, we think casino operators may face difficulties in diversifying the customer base at least in near-term.