Macau Casinos Expected to Sidestep Non-Gaming Spending Activation

Macau Casino Revenues Rebound, but Nongaming Spending Goals Remain Elusive

Macau’s casinos are experiencing a recovery in business, following China President Xi Jinping’s decision to lift the “zero-COVID” pandemic policy. This controversial program had imposed lockdowns in response to new COVID-19 cases, stalling normal life in mainland China and the Special Administrative Regions (SARs) of Macau and Hong Kong.

Despite the recovery, Macau Chief Executive Ho Iat Seng does not anticipate gaming revenue reaching a level that would trigger the casinos’ nongaming spending requirement. Macau casinos have collected nearly $18.5 billion from players this year through October.

Gross gaming revenue (GGR) for the year through October has reached approximately MOP148.5 billion (US$18.47 billion), reflecting a 316% increase from a year ago. However, it remains 40% below 2019 levels, when the six casinos won about $30.7 billion between January and October.

Leading casino operators such as Sands, Galaxy, Wynn, MGM, SJM, and Melco have benefited from relaxed cross-border travel restrictions in China, with October marking the best gaming month since the start of the pandemic, with GGR reaching $2.42 billion.

Last year, when Macau issued new 10-year gaming licenses to the six casino operators, they agreed to collectively invest around $13.5 billion in their resorts through nongaming projects. This approach aligns with Macau’s goal of becoming a diversified tourism market, not solely reliant on gaming.

The $13.5 billion nongaming investment requirement can increase in the coming years if gaming revenue reaches certain benchmarks. If the six concessions win MOP180 billion ($22.4 billion) in a year through 2027, the nongaming spending requirement would increase by 20%, or another $4.48 billion.

Macau SAR Chief Executive Ho Iat Seng stated that he doesn’t expect the casinos to reach the threshold for nongaming spending this year, despite the escalation in recovery seen in recent months. However, Macau’s recovery has been evident, with the casinos winning $2.14 billion in August and $1.86 billion in September before October’s $2.42 billion haul.

The breakdown of nongaming investment requirements is based on each casino’s market share, with leading operators such as Sands China, Galaxy Entertainment, Wynn China, MGM China, SJM Resorts, and Melco Resorts having specific nongaming spending obligations.

While projects have been submitted to the government for review, Macau Chief Executive Ho Iat Seng has not yet approved any casino’s nongaming spending plans. The focus on nongaming investment reflects Macau’s long-term vision for a diversified and sustainable tourism market.