Macau Gaming Revenue is out of control

Quote: Ayecarumba

It's pretty crazy, but I can't imagine Sands Corp totally exiting the US of A. The American economy will eventually rebound, and the Macau/Chinese bubble will eventually pop (see Japan 1980's). Having diversified holdings is wise.

The bubble is still inflating. October revenue was $3.45 billion in one month, a new record. It was just a few months after breaking the $3 billion barrier.

Total for the last 12 months in Macau is US $33.66 billion . Revenue should take off next year as the new high speed trains begin service.

Quote: pacomartin

The bubble is still inflating. October revenue was $3.45 billion in one month, a new record. It was just a few months after breaking the $3 billion barrier.

Total for the last 12 months in Macau is US $33.66 billion . Revenue should take off next year as the new high speed trains begin service.

Who or what is profiting from these dizzying numbers? Are the Ho clan putting all this cash in banks around the world? Is the Chinese government building roads and schools?

i dumped HSBC yesterday and switched to a basket of Wynn, Sands, SJM, MGM and Galaxy

Quote: Ayecarumba

The American economy will eventually rebound

Define rebound. It will never be anything close to what it
was. My house will never be worth what it was in 2007.

Quote: EvenBob

Define rebound. It will never be anything close to what it
was. My house will never be worth what it was in 2007.

Your house will surpass its 2007 value. It might be 100 years from now, but it will go up. Inflation alone will see to that.

Quote: Ayecarumba

Your house will surpass its 2007 value. It might be 100 years from now, but it will go up. Inflation alone will see to that.

in housing, 40 years seems certainty, 30 yrs a safe bet, 20 yrs 'probably', 10 yrs 'likely'. We'll give Bob the benefit of the doubt on the 10 yr thing this time from 2007. However, it is my opinion that if we ever come out of this thing we will have a nasty bout of inflation.

And that all depends too, Detroit might not fit this for example.

Quote: odiousgambit

in housing, 40 years seems certainty, 30 yrs a safe bet, 20 yrs 'probably',

I'd say 30 years and it will be back to where
it was. I don't care, we'll never sell, it would
be dumb. The mortgage was paid in 94, let
the kids worry about it.

Property going up is a relatively new thing.
Before WWII, if you bought a house in 1920,
in 1940 it was worth the same amount, if
you account for inflation. After WWII, its was
supply and demand and that bubble burst
in 2008. Before 1940, there were far more
landlords than home owners. Looks like
we might be going back to that. Bod Hope
and Bing Crosby were ahead of it in the 40's,
they invested all their money in Hollywood
real estate. Boy, were they right.

Quote: Ayecarumba

Who or what is profiting from these dizzying numbers? Are the Ho clan putting all this cash in banks around the world? Is the Chinese government building roads and schools?

Quote: Taxation Research of Macau

Taxation Research of Macau
The tax system of Macao is basically derived from Portugal. Amendments and improvements have been made constantly on the tax regulations in order to let the tax system adapt more closely to the Territory. As the tax system of Macao is territorial in nature, all activities of commercial or industrial nature which are being conducted in the territory are taxable.
The tax system of Macao has an attractive characteristic of the lowest tax rates as compared to other South East Asian countries. In fact, as the Territory is still in the developing stage, low tax rates are essential for attracting foreign, as well as local investments. The main reason why such low tax rate can be maintained is that direct and indirect taxes are not the principle components of total public revenue. High tax rates and as a result, large tax revenues are what is often seen in other countries. But in the case of Macao, the major source of public revenue comes from revenues from franchises granted, which are actually the rent, the complementary tax other revenues collected from the gaming industry. With the gaming industry supporting most of the Territory’s revenues, the tax burden on local and foreign business and economic activities is highly bearable due to the benefits derived from low tax rate. As a result, the economy of Macao has been developing at a remarkable speed.

The taxation of casino sub/concessionaires in Macau is currently of 35%, plus two contributions of up to 2% and 3% for social and economic purposes. The maximum tax is therefore 40%. In addition, a fixed premium is also payable, plus a premium per VIP table, other table, and slot machine. Gaming promoters pay taxes on commissions received.

Casino tax was USD 5.4 billion in 2008, accounting for 70% of total Macao government revenue. Tax Revenue must be approaching $12 billion in 2011. I would think some of this windfall has to be going to the federal government.

Singapore
(Adjusted) Gross Gaming Revenue (GGR) generated from premium players will be taxed at 5% while GGR from all other players will be taxed at 15%. (A premium player is a person who maintains a deposit account with minimum amount of $100,000 before he starts playing any game in the casino. )

Singapore also levies a Corporate Income Tax of 17%.

The government of Singapore treated gaming as a way of bringing revenue to the entire city state, and increasing tourism. Similar arguments were used in Nevada , New Jersey, Mississippi, Colorado, and Oklahoma. Other states treat casinos more like lotteries, where the casino is in partnership with the state,


Effective Tax Rates in 2008
8.0% Nevada
9.5% New Jersey
12.0% Mississippi
12.4% Colorado
14.4% Oklahoma
15.0% South Dakota
16.1% Montana
22.9% Iowa
23.5% Louisiana
23.6% Michigan
26.0% New Mexico
26.3% Missouri
31.0% Indiana
35.9% Delaware
36.1% Illinois
45.2% West Virginia
47.1% New York
47.3% Pennsylvania
49.6% Maine
50.0% Florida
65.3% Oregon
74.3% Rhode Island

Source for Casinos and Racinos:  American Gaming Association, State of the States, 2009

Macao Government also exempts many other taxes such as corporate income tax, equipment and facilities import tax, etc. The Lease land at a very low rate and provide free dealer training. The Central Government of PRC keeps demand high by not permitting any casinos in Mainland China/Hong Kong, and allowing the “Individual Travel Scheme”, which is relatively unique in China (as opposed to group travel). In addition they are building a solid transportation infrastructure.


In theory as the Chinese population ages and get wealthier, they should produce the same number or more international tourists out of the total population of 1400 million people as Germany does out of the total population of 80 million. China seems determined to keep tourism domestic as much as possible. Logically, you would think that a lot of it would spill into Vietnam, Thailand, Guam, and the Phillipines following the same economic laws that govern western tourism.

Macau finished the year up 42.2% from last year (roughly 6 times that of the Las Vegas strip). The individual months have been that high since March, so it wasn't a surprise. Revenue from Macau casinos are on the same order of magnitude as revenue from all commercial casinos in the entire USA (but not lotteries, OTB, and Indian casinos).

Even more expansion is predicted for next year.

Given the prospects of a Chinese hard landing, the massive corruption in China, and the fact that the country is well...not a democracy by any stretch, I wonder if the chance for civil unrest/revolution are real.

And if that happens...what will happen to the profits of these Macau casinos that thrive off of the corrupt elite.