Macau Casinos Likely to Avoid Nongaming Spending Trigger This Year

Macau casinos continue to see business recover in the first full year after China President Xi Jinping lifted his zero-COVID pandemic policy. The controversial program initiated lockdowns when new COVID-19 cases were detected and kept the resumption of normal life on the mainland and in China s two Special Administrative Regions (SARs) on hold.

Macau casinos continue to welcome back travelers and their . Macau is one of two SARs in China, with Hong Kong being the other.

Gross gaming revenue (GGR) this year through October totaled approximately MOP148.5 billion (US$18.47 billion). Gaming has rebounded by 316% from a year ago but remains 40% below 2019, when the six casinos won about $30.7 billion between January and October.

Sands, Galaxy, Wynn, MGM, SJM, and Melco are benefiting this year from China easing cross-border travel. October marked the enclave s best gaming month since the outbreak of the coronavirus, as .

When Macau issued the six casino operators new 10-year gaming licenses late last year, the companies agreed to collectively invest about $13.5 billion into their resorts through nongaming projects. The Macau SAR Government is taking a page out of the Las Vegas playbook in seeking to become a diversified tourism market and not one that solely relies on gaming.

The $13.5 billion number can expand in the coming years if the gaming business . If the six concessions win MOP180 billion ($22.4 billion) in a given year through 2027, the nongaming spending requirement jumps 20%, or another $4.48 billion.

During a question and answer session with the media this week, Macau SAR Chief Executive Ho Iat Seng stated he doesn t expect the casinos to reach the threshold this year.

We won t know if it reaches MOP180 billion until next month, but I can tell you that this figure is impossible. It has not reached MOP180 billion, the chief lawmaker said.

The chief executive s comments are a bit puzzling, as through 10 months, Macau casinos have averaged about $1.84 billion a month in GGR. Even at that rate, the final two months would add about $3.68 billion in gaming revenue to take the full-year tally to around $22.15 billion, just shy of the $22.4 billion trigger.

But Macau s in recent months. The casinos won $2.14 billion in August and $1.86 billion in September, before October s $2.42 billion haul.

Macau broke down its nongaming investment requirements based on gaming market share at the end of 2022. With Sands China leading the market, the company was issued a $3.46 billion nongaming requirement.

Galaxy Entertainment is on the hook for $3.42 billion, Wynn China for $2.05 billion, MGM China for $1.87 billion, SJM Resorts for $1.5 billion, and Melco Resorts for $1.24 billion.

Ho told reporters he hasn t formally approved any casino s nongaming spending plans, though projects have been submitted to the government and are being reviewed.