Macau Outlines Separate Gaming Zones for Foreign and Chinese Visitors

Macau’s Executive Council provided further details on Friday as to how gambling operations in the Special Administrative Region (SAR) will work moving forward. Concessionaires will have to establish areas that cover non-Chinese and Chinese visitors, with both gaming spaces being exclusive and dedicated.

Macau Goes with Segregated Approach to Foreign and Domestic Gamblers  

Non-Chinese visitors will have access to newly designed chips that meet regulatory standards, and the chips are introduced to gauge the impact overseas customers have on the gambling sector. Macau has not hidden its ambitions to ween off Chinese nationals from gambling and has issued ten-year concessionaire licenses which focus on attracting overseas visitors for gambling while focusing on other branches of the entertainment and tourism industry insofar as Chinese visitors go.

However, this measure is not entirely high-handed, as the government is promising a 5% tax break for concessionaires that successfully boost their overseas visitation rates. The tax break would only apply to these zones, though, but the plan may yet backfire. According to analysts from JP Morgan, the measure seems to be counter-intuitive, and it may in fact suppress gross gaming revenue.

The issue is not so much with the administrative part, as it could make visitors reluctant to visit gaming properties that segregate locals and foreigners. Besides, foreigners drive less than 10% of the overall gross gaming revenue in Macau, making it a harder sell still. Similarly, foreigners themselves would not be comfortable only remaining in a designated part of the gaming floor, reads the JP Morgan analysis.

Tax Breaks Good Incentive for Operators, Poor Motivator for Visitors

Meanwhile, the Executive Council sees this as a tax break and a measure that outlines the process and criteria that need to be met in order for the measure to apply. Still, the legislative body insists that the tax break will be calculated based on how successful concessionaires are in driving overseas visitors. With China’s zero COVID-19 measure backfiring in part, this new ambitious undertaking on engineering Macau’s entertainment industry does come with serious challenges for operators.

However, they have invested billions of dollars over the years, making them reluctant to give up. The next ten years will be all about adapting to the new rules and gauging the adequacy of the new laws pitched by the Macau government.