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Exclusive, expat-only zone for Macau advantages minimal—experts

July 3, 2023 Macau Industry Updates

Exclusive, expat-only zone for Macau advantages minimal—experts

With none of the six Macau gaming concessionaires applying for the tax break catered for foreigners (reducing the 40 percent charge on their GGR), experts are struggling to find quantifiable advantages out of foreigner-only gaming zones, also considering that the proportion of foreign visitors to Macau ha always been small.

Experts are struggling to find quantifiable advantages to the new foreigner-only gaming zones in Macau casinos, noting that none of Macau’s six gaming concessionaires have so far applied for the tax break, reducing the 40 percent charge on their gross gaming revenue (GGR), which could be applicable to gambling by foreigners under the new concession system.

Speaking to AGB, Nelson Kot, the president of the Macau Comprehensive Social Research Association says that foreigner gaming zones are not a novelty.

“Singapore has a foreigner gaming zone policy for so lon,”notes the representative. “Local citizens have to pay an entry fee to gamble in casinos, and there is no such a charge for foreigners,” he states, noting that the lure is for more foreign punters.

Macau is seen to have an uptick in visits, with 20 million tourists by the end of the year, driven by direct flights and long-haul destinations from areas such as the Middle East and Europe.

According to Macau’s Administrative Regulation No.54/2022, the SAR’s gaming concessionaires are eligible for a waiver on the 5 percent tax of revenues generated by the foreigner-only gaming rooms. Foreigners are defined as anyone from non-Chinese territories (which encompass Macau, Hong Kong, and Taiwan).

The six operators in Macau have established areas specially for gambling by foreigners across an aggregate of 12 casino properties.

However, the proportion of foreign visitors to Macau has always been small.

Besides, Not notes that the services for high-spending foreign tourists should include supplying gaming credit, which means Macau casinos need to be cautious with money laundering issues.

“Frequent punters have many options across Asia,” notes Kot, “Macau is certainly not the most accessible place to go”, he adds.

Macau’s market has always been domestic, with most of the punters coming from the neighboring province of Guangdong, and well some regionally tourism has picked up – it’s largely through low-cost carriers, which aren’t bringing in top-tier spenders.

And those higher-income players further away have never come in large numbers – such as those from Europe or North America. Kot notes that the primary reasons are the language barrier and no strong connections with the city. “I am not optimistic about this development,” he opines regarding opening up to a long-haul market.

“Luring more foreigners via tax break is a good wish, in reality, the operators have to work hard to find a solution.

“Foreigners have a very different attitude towards gambling compared to Chinese community. Gaming is more about leisure activities,” he notes.

This observation does pinpoint a key difference between Macau’s non-gaming idol: Las Vegas – which enjoyed a short-lived period of higher revenues than the SAR during COVID.

Macau’s casino GGR stood at MOP65 billion ($8.06 billion) for the five months to May 31st, an increase of 173 percent from a year earlier. However, mainland Chinese and Hong Kong tourists continue to be the driver for Macau’s recovery.

According to the Macau Government Tourism Office (MGTO), the recent daily number of foreign visitor arrivals to the city ranged between 3,000 and 5,000, reaching only 20 to 30 percent of pre-COVID levels.

Kot believes that many foreigners have come to the city for MICE, and that the ratio of punters is very low. In this case, he urges the Macau government to release periodically the data, noting this may help to monitor the development (or lack thereof) of the sector.

Looking again to the foreigner-only zones, the former director of the Macau Association of Gaming and Entertainment Promoters, Luiz Lam, noted that there was a low amount of traffic in the established foreigner gaming zones.

But he also pointed out the hassle to the customer in verifying that they are foreigners, stating that “operators might prefer to skip the tax break rather than have to bother the punters,” also noting the further verification checks by the gaming watchdog on the betting figures in the specific areas – and relevant punters.

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