Macau govt to continue push for non-gaming in resorts

The Macau government would continue to promote development of non-gaming elements at the new casino resorts that are being opened on Cotai between now and the end of 2017, the city’s Chief Executive, Fernando Chui Sai On (pictured), said on Sunday. His remarks came during events to mark the 16th anniversary of the handover of Macau from Portuguese administration to that of China.

Mr Chui told reporters the goal of pressing ahead with more non-gaming elements in casino properties was to promote the economic diversification of Macau and the city’s sustainable development, according to a government release. He added that non-gaming features already accounted for about 90 percent of the amenities in newly opened gaming resort projects. The release didn’t clarify if that was a reference to the amount of floor area given to non-gaming.

The most recent Macau gaming resort to open – the US$3.2-billion Studio City, 60-percent owned by Melco Crown Entertainment Ltd and launched on October 27 – has a wide range of non-gaming facilities.

The government has said previously that it would link the allocation of new-to-market gaming tables for new Cotai projects to the non-gaming amenities they added to the local tourism market. It said that such a policy approach would help speed the process of diversifying the city’s tourism sector.

A number of investment analysts have said that the government push for more non-gaming in Macau casinos puts pressure on the city’s six casino enterprises, as non-gaming revenue still represents a small fraction of each resort’s overall earnings. In 2014, fewer than 10 percent of Macau casino resorts’ gross revenues came from non-gaming activities, estimated Fitch Ratings Inc in a report issued in August.

Non-gaming revenue for Macau casino resorts is “simply not large enough” to offset declines in gaming spend in the city, Union Gaming Research LLC wrote in a report earlier this month. Non-gaming spending of visitors to Macau in the third quarter fell 19.5 percent year-on-year according to data released by the city’s Statistics and Census Service.

Market wide, Macau’s casino gross gaming revenue (GGR) for November fell by 32.3 percent from the prior-year period, the 18th straight month of GGR retreat measured year-on-year. It was the lowest monthly GGR tally since September 2010, according to official data. GGR for the first 11 months of 2015 was MOP212.5 billion (US$26.6 billion), down 35.3 percent in year-on-year terms.

In his comments on Sunday, Mr Chui reaffirmed the Macau government forecasts GGR to come in at MOP200 billion in 2016, a further decline from the aggregate annual tally expected for this year. It expects an average of MOP16.6 billion per month in GGR next year, Macau’s Chief Executive said.

Mr Chui added – according to the release – that his team would continue to “optimise” gaming regulation. He noted the government was finishing the mid-term review of Macau’s gaming concessions, which would provide suggestions on how to “promote effectively a healthy development of the industry”.

The mid-term review results are to be publicly announced by early next year, once the government has assessed a preliminary report submitted in September by the Institute for the Study of Commercial Gaming at the University of Macau.

The Macau government has previously said that how each of Macau’s six casino operators scores in the review will not have a direct impact on whether or not the government will refresh gaming rights for them. The current concessions expire on varying dates between 2020 and 2022. But officials have admitted that negotiation on the specific terms under which any such renewals might take place would be based on the mid-term review’s conclusions.


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