Macau (MNA) – Representatives from the Macau junket sector said on Tuesday that the local government should assist the sector in collecting bad debts and reduce gaming taxes.
In a talk held today at the Macau Gaming Summit (MGS) 2018 representatives from the sector suggested that the local government should implement taxes similar to the ones enforced in the Philippines and Singapore.
“We have to find a balance for the taxation. It can be difficult for the sector and if some tax changes can be made from the top down we can continue the healthy development of the gaming industry,” the CEO of Tak Chun group, Levo Chan, said today.
Macau authorities collect gambling taxes set at 35 per cent of gross gaming revenue plus an additional 4 per cent on gambling sector tax, while Singapore per example collects a 12 per cent tax on VIP play, with the Philippines collecting 7 per cent for local VIP players and 15 per cent for foreign VIP players.
The Tak Chun CEO also suggested that ‘bad’ debts could be deducted on the gaming taxes while indicating that authorities could assist junkets in collecting debts.
Junkets operators bankroll VIP clients through lending money to players and collecting debts, while paying a commission to gaming operators for their services.
“In the gaming industry we face a large amount of bad debt, it’s a high risk industry, just like banks or financial institutions in Hong Kong but these financial industry have very strict requirements for loans, while in Macau some players can just pull some strings and get a lot of money. It’s not easy for us to follow these regulations since players can just go to other companies. The government to talk with the industry to solve or legalize bad debts, or help us collect them or include them in tax reduction,” Mr. Levo said.
Meanwhile the Vice-Chairman and Executive Director of David Group, Weena Sae-Kee, indicated that with the majority of players coming to Macau hailing from Mainland China, collecting owed debts faced difficulties when the loaners moved out of the city jurisdiction.
“The VIP business is a legitimate business and it takes a lot of time for us to collect those bad debts […] some casinos really face bankruptcy due to bad debts […] There could be a sound mechanism to collect debts even outside Macau”, she stated.
The Chairman of Macau Junket Association, Kwok Chi Chung, suggested Big Data could be applied in creating a “loan central system” in which information would be provided to the sector on the credit history of different players.
“We’re still waiting for the government decision, for us its essential for us to collect all those loan information. Nowadays we all talk about the loan risk […] I think it would be good both to the government and for the industry,” Mr. Kwok stated.
The association has repeatedly suggested the creation of this database to the Macau government since 2016 but with resistance to the idea due to privacy issues raised by the  Office for Personal Data Protection (GPDP).
“We need to balance the privacy and credit, we respect individual privacy but we need to pace up with the changes and provide a healthy taxation,” the Chairman of the Macau Gaming Equipment Manufacturers Association, Jay Chun, who moderated the talk, commented.
A slower year
When asked about expectations for the VIP sector in 2019, the sector representatives considered that macroeconomic factors such as the US-China trade war could decrease the growth rate of the VIP sector, considered to be more sensitive to such factors than the mass market.
“The VIPÂ business highly depends on neighboring regions and it closely related to the gross domestic product (GDP) an economic development of China. I think VIP growth will probably stay at the level recorded this year,” the David Group Vice-Chairman stated.
Macau SAR gross gaming revenues in 2017 increased 19.1 per cent year-on-year to MOP265.74 billion (US$33 billion), and went up nearly 16 per cent to MOP224.9 billion in the first nine months of the year.
Meanwhile VIP baccarat revenue only went up 3.6 per cent in the third quarter of this year to MOP40.1 billion, a contrast to the 35 per cent yearly rise that had been recorded in the same period of 2017
The CEO of Tak Chun group believed the sector would just “break even” next year and put aside projects by the group to apply to a gaming operator license in a future gaming concession tender.
“At this moment our group does not have this intent to apply for a gaming operator license, we know the competition is very serious and our group will not take part,” Mr. Levo said.
