Gov’t taxes on junket commissions drop in 2019

The Macau government has received MOP299 million (US$48.8 million) in taxes on commissions paid by casinos to junket operators in 2019, a 24 per cent year-on-year drop, according to the last year’s budget execution report.

This amount failed government estimates for last year, set at MOP360 million.

Currently, local authorities collect a 5 per cent tax on commissions or other fees paid to VIP gambling promoters.

However, when justified by public interest, the Chief Executive may partially exempt for a period not exceeding five years the payment of the tax referred to in the preceding paragraphs, but such exemption may not exceed 40 per cent of the tax rate.

Junket operators usually either receive a share of the revenue by casinos or a commission no higher than 1.25 per cent on rolling chip turnover.

In total, the Macau government collected around MOP112.7 billion in gaming taxes, a small 0.7 per cent drop from the year prior, with that amount representing 84.8 per cent of the MOP132.8 billion government revenue reported for last year.

In 2019 the gaming sector generated MOP292.4 billion in gross gaming revenues, at the time a 3.4 per cent year-on-year drop.

The number of licensed VIP junket promoters has gradually decreased in recent years, with the number of operators licensed to conduct business in the Macau SAR in 20219 falling by 8.3 per cent year-on-year to 100, the sixth consecutive year with a decline reported.

Last year also saw the tightening o several regulations concerning the sector, with MNA reporting in September, 2019 that the Gaming Inspection and Co-ordination Bureau (DICJ) had issued instructions that month to limit any “transfer of information about gaming activities or operations, including customer personal data” for third parties, in the SAR or elsewhere, for gaming concessionaires, sub-concessionaires and junkets.

A month later the DICJ Director, Paulo Martins Chan, stated the regulator had finished drawing up draft regulations aimed at raising the standard on background checks of those involved in Macau’s junket industry, including their capital sources.

The DICJ has also previously indicated it has finished a review of law No.6/2002 with regard to the city’s junket operations, with a Macau Business report stating the proposed new requirements include raising the minimum capital amount of a junket from MOP25,000 to MOP10 million, with capital deposit rocketing from MOP100,000 to MOP10 million.

Other changes are alleged to include that the names of senior employees, staff in charge of finance and partners of the junkets will also have to be publicised on the website of the gaming regulator and that operators are to be required to have at least one Macau permanent resident as a shareholder of the business.

The former DICJ Director, Paulo Martins Chan, later stated in an interview with Macau Business that restructuring and imposing tighter regulations of the city’s junket industry without impacting gaming revenues was one of the achievements he is more proud of as head of the local gaming watchdog.