Macau (MNA) – Gaming analysts told Macau News Agency (MNA) government predictions for lower gross gaming revenues in 2019 than in previous years are “conservative” but that a contraction in gaming revenues growth could be seen due to external factors.
Last week Secretary for Economy and Finance Lionel Leong Vai Tac said he expected the government’s revenue from direct gaming taxes to amount to MOP91 billion (US$11.2 billion) next year – more 13 per cent than expected for this year – despite having estimated that gross gaming revenues will reach MOP260 billion in 2019.
With Macau’s gross gaming revenues having amounted to MOP265.74 billion last year, government predictions seem conservative, a usual occurrence when local authorities make budget predictions, according to Ricardo Chi Sen Siu, associate professor in Business Economics at the University of Macau.
“Since 2014 every year when the government prepare the budget, they prepare it based on if the gaming tax will be enough to support the government spending […] some people think looking at the expected gaming tax you can predict gross gaming revenues but I don’t think it’s the right way to interpret the government’s expectation,” Mr. Siu said.
According to the gaming researcher, although he does not believe gross gaming revenues will be lower than previous years, “external uncertainty” over what impact the trade war with the US could cause to China could lead to the sector growth rate to slow down.
In 2017 gross gaming revenues increased 19 per cent year-on-year to MOP265.74 billion, with some analysts, such as Union Gaming, believing 2018 could see a 16 per cent increase.
“Up until this point Macau’s gross gaming revenues still managed to have some reasonable growth […] there will still be some growth in 2019 when compared to 2018, but growth will not be considerably higher,” the professor said.
For Ben Lee, managing partner Macau-based gaming consultancy iGamix, a slow down in gaming revenues growth is “happening and it will continue to happen” through 2019, however he indicates there have been no signs of potential “drivers” for the final gaming results to be lower than in previous years.
“The trade war is a very dominant factor in our calculation at this point in time. However for the gaming industry to actually contract, you would have to see a contraction in China’s own economy and at this point in time I don’t think anyone is predicting an actual contraction in China’s gross domestic product (GDP) in 2019,” he stated.
According to the gaming expert to see such as contraction in gaming results would require external circumstances of the level of the anti-corruption and anti-ostentation campaign conducted by the Chines central government in 2013 and 2014, which led to the last time gaming results went down.
“Barring something similar like that happening there are no external factors that we can see that could drive the gaming industry into a contraction at this particular point in time,” he stated.