Who’s That Knocking?

Structural issues such as Macau’s high gaming tax rate could provide opportunities for Singapore and others

“We believe Singapore’s key competitive advantage over Macau is its lower gaming tax rate, which provides operators with more room to raise junket commission to attract players,” says the Goldman Sachs paper.

“In Macau, for example, after paying 39% of revenue for gaming tax, 46% for junket commission and another 6% for operating/overhead costs, we estimate casino operators’ (under our coverage) average normalized EBITDA [earnings before interest, taxation, depreciation and amortisation] would be 9%. In Singapore, our ASEAN conglomerates analyst expects EBITDA to be as high as 30%+ due to lower VIP gaming tax rate (12% in Singapore vs 39% in Macau).

“On the other hand, given its location and more stringent process of visa applications for Chinese visitors, we believe the Singapore casinos may be more appealing to visitors from the ASEAN countries vs. the PRC,” adds the report.

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