Macau GGR so far may affect yearly estimates

Macau’s Fiscal Outlook: Gaming Revenue Declines Raise Concerns

Macau’s Chief Executive, Sam Hou Fai, has recently projected that fiscal revenue for 2025 may fall below expectations due to a significant deceleration in the city’s gaming sector. Since his appointment in December, Sam has emphasized the need for the Special Administrative Region (SAR) of China to diversify its revenue streams away from its historically dominant gaming industry. He highlighted that downturns in gaming revenue, such as the one experienced during the three-year COVID-19 shutdown, directly impact the economic stability of the city.

In the first quarter of 2023, Macau’s gross gaming revenue (GGR) has underperformed relative to projections. January saw casinos generate MOP 18.25 billion (£1.75 billion/€2 billion/$2.28 billion), and February followed with MOP 19.74 billion—insufficient to meet optimistic forecasts, particularly in light of anticipated boosts from Lunar New Year festivities. To meet lawmakers’ target of MOP 240 billion for the year, the city would need to elevate its monthly GGR average to approximately MOP 20 billion.

At a briefing held on March 13 with representatives from the Chinese government, Sam acknowledged the likelihood that “this year’s fiscal revenue may not be as optimistic as expected” and cautioned against overly positive economic forecasts.

“1+4” Strategy: A Long-Term Vision

The economic impact of COVID-19 was profoundly detrimental to Macau’s economic landscape. In response, former Chief Executive Ho Iat Seng introduced a “1+4” strategy aimed at economic diversification and recovery. This five-year initiative seeks to enhance Macau’s appeal as an international tourism hotspot while simultaneously fostering the development of four emerging industries: “Big Health,” modern financial services, high and new technology, and the convention and exhibition industries alongside sports and trade.

However, as Sam has acknowledged, this shift away from a gaming-centric economy is a “structural problem” that is unlikely to resolve swiftly. The task ahead is complex, particularly given the looming competitive landscape: Japan plans to inaugurate its first casino resort in 2030, and Thailand is positioned to open a venue even sooner, further jeopardizing Macau’s market share.

Navigating Economic Turbulence

Competition is not the only challenge Sam faces. He underscored concerns at a February 19 meeting of the Macau Economic Development Commission regarding the broader implications of global economic instability and protectionist policies. As he articulated, “As a small-scale economy, Macau cannot remain unscathed, particularly with escalating competition in tourism and gaming from neighboring regions.”

“Our country’s economy continues to face a myriad of difficulties and challenges,” he remarked, identifying critical issues including insufficient domestic demand, production hurdles for various enterprises, and rising concerns over employment and income growth for residents.

In light of these challenges, Sam emphasized the necessity for vigilant assessment and adaptable responses. Given that Macau’s economic framework relies heavily on the integrated tourism and leisure industry, it remains critically dependent on visitors from mainland China.

Looking ahead, the Macao Government Tourism Office anticipates a potential influx of approximately 39 million visitors by 2025, nearing the pre-pandemic levels seen in 2019. However, this optimistic projection—and the accompanying GGR forecasts—may require reevaluation based on the region’s current performance and emerging trends.