Macau’s Legislative Assembly has been informed that income from direct gaming tax should reach US$2 billion this year, the highest ever recorded. The 17 casinos in China’s only region with legalized gaming pay 35% of their gross revenue as direct tax. Macau has three main sources of income: gambling, tourism and the garment industry. Economic growth for the third quarter has slowed with a decline in merchandise exports and less than booming gaming revenue.

Although GDP is showing only a 2.8% increase for the third quarter, and is the lowest since the 2003 SARS virus cut tourism, Macau’s Statistics and Census Service describes growth in the gaming and tourism sectors as ‘stable’. The government admits that economic growth this year has been less than originally estimated. Tourism in Macau is benefiting from rising incomes in China, which allows for increasingly large numbers of Chinese to travel. In the first 10 months this year, Chinese citizens travelling abroad rose to 25.76 million, up from 5.32 million in 1997. As the Las Vegas of the East, Macau’s gambling revenues consequently have been booming, encouraging the construction of more casino complexes.

Competition concerns in Macau have already led to a downgrading of Las Vegas Sands Corp by JP Morgan, and a 4% fall in share value yesterday. Venetian Macau Limited, a subsidiary of Las Vegas Sands Corp, has commenced marketing for a US$2.5 billion credit facility to fund design, development, construction and pre-opening costs for projects in Macau, including The Venetian Macao and other projects on the Cotai Strip. Existing casino operators in Macau will not only have to face stiffer competition locally, as new developments open for business, but also from neighbours such as Singapore where two casino resorts have been sanctioned. Other Asian countries are also considering gaming regulation to boost their economies through increased tourism and gambling taxes.
(E-11.30.05)

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