he creation of the Chamber of Macao Casino Gaming Concessionaires and Sub-concessionaires will be an important instrument in promoting the benefits of constructive competition for the gaming industry and for all of Macao, said Stanley Ho, managing director of SJM Holdings Ltd., one of the six licensed operators or concessionaires, at the signing ceremony for the formation of the Chamber. Ho was named as the first president of the organization.
Executive representatives from the other concessionaires, including Las Vegas Sands Corp., Wynn Resorts Ltd., Melco Crown Entertainment Ltd., Galaxy Entertainment Group Ltd., and MGM Grand Paradise Ltd., and officials from the Macao Special Administrative Region (SAR) government also attended the ceremony.
As of June this year, SJM Holdings Ltd. gained the largest market share of 31 % in Macao's gaming sector, which was followed by Las Vegas Sands with a share of 25 %. "If our industry is suffering from destructive competition rather than constructive competition, then Macao will suffer," Ho said.
VIP or High-roller gambling has long been a focal point of Macau's gaming sector, which contributes over 70 % to the city's total gaming revenues. To compete for these high rollers, many casinos chose to raise the rate of commission paid to junket operators which work as an agent that brings the VIP gamblers to local casinos.
The increasing commission rate has hurt the revenue growth of most of the gaming operators. In view of the situation and prompted by the SAR government, the six operators held a number of meetings to talk about the issues, and the creation of the Chamber was a major step forward.
The six operators are still in talks over the commission rate cap, and a specific group will be formed inside the Chamber in the future so as to address the issue., said Pansy Ho, managing director of MGM Grand Paradise Ltd., after the ceremony. The six operators has agreed to set the cap at 1.25 % in previous talks. However, only Sands and Melco actually signed deals concerning the commission rate recently, according to Bloomberg.
Meanwhile, new rules regulating the commission rate was being drafted by the SAR government, and casino operator that is found to break the commission cap may be subject to a fine of us$ 63,291, according to Ho.
Ho also urged the SAR government to reduce the gaming taxes, which, he said, were too heavy for the operators, and will affect the SAR's competitiveness in Asia's gaming market, since Singapore, which will soon open its first casino, has a much lower tax rate of 15 %.
By law, local casinos were required to pay 35 % of their revenues as direct gaming taxes to the SAR government and another 5 percent as special contributions to the city's urban development and promotion of local tourism.
Casinos in Macao reaped a total of us$ 3.7 billion in gross revenues in the second quarter of this year, dropping by 12 % from a year earlier, according to the city's Gaming Inspection and Coordination Bureau. The SAR's direct gaming tax income for the first half of this year fell 10.3 % year-on-year to us$ 2.34 billion.
Macau's gaming sector has suffered from both the global financial crisis and Chinese mainland's visa restrictions on its residents, limiting their trips to the SAR.
Las Vegas Sands' 12-billion-dollar Cotai Strip project on an area of reclaimed land in Macao, which is slated to build 11 resorts with a total of 20,000 hotel rooms and a number of casinos and shopping malls, has already been stopped when the global financial crisis made it hard for the company to seek funds to finance its projects.
The city's visitor arrivals for the first half of 2009 also decreased by 11.4 % year-on-year to just 10.4 million, with those from the Chinese mainland, its major tourist source market, significantly falling 17.3 % according to the figures from the city's Statistics and Census Service.