Hong Kongers spent HK$22 billion (US$2.8 billion) in Macau casinos during 2010 according to a study by the Hong Kong Jockey Club (HKJC). Given that the population of Hong Kong is around seven million, the figure amounts to at least HK$3,000 (US$385) for every adult and child in the Special Administrative Region.
The HKJC figures need to be treated with a little caution. It is a survey after all, not an audit. The context is that the Jockey Club is in a state of almost perpetual lobbying to persuade its political masters to take some of the commercial shackles off its horse racing and sports betting activities. That’s so it can compete more effectively with the Macau casinos by offering bigger prize pools and doing so more frequently. Keeping the HKJC competitive is vital if it is to continue to donate large portions of its operating surplus to Hong Kong charities says the management.
To put the Macau spending figure in context, although Hong Kongers were the second biggest group of visitors to Macau in 2010 with 7.47 million arrivals (30% of the 24.97 million total) in monetary terms they accounted for just under 12% of the MOP188.3 billlion revenue that Macau’s gaming regulator the DICJ says was spent on games of fortune in 2010. That’s probably because Macau gaming is heavily skewed toward VIP baccarat and many of those VIP players come from the Chinese mainland. The Hong Kong visitor market to Macau is also however thought to have a significant componment of high rollers. They will be pushing up the total spending figures of Hong Kong residents going to Macau. These VIPs are likely to be people who wouldn’t in any case be in the market for the kind of sports betting, lottery draws and horse racing betting provided domestically by the HKJC.
But HKJC chief executive Winfried Engelbrecht-Bresges maintains that Macau is a threat to the Club.
“Hong Kong people are losing more money to the casinos in Macau than in Hong Kong,” he said in comments reported by the South China Morning Post (SCMP).
He said the club was not facing an immediate threat, but “severe competition” from Macau – with its lucrative combination of high-rollers brought in by junket operators who offer big lines of credit to gamblers, and mass market operations – was taking its toll.
“It would be wrong to say that we cry foul and that we are in a crisis. This is a matter of competitiveness over a period of time,” he explained to the SCMP.
He added that the club’s ongoing charity donations – which reached a record-high HK$1.62 billion last year – would not be possible without a sustainable betting operation.
The estimate of money lost by Hongkongers in Macau was based on exit interviews at gambling venues, casinos’ annual reports, and investment bank reports on casinos reported the SCMP. He said all three sources came up with similar figures. The study found the amount wagered by Hong Kong people in the former Portuguese enclave’s casinos surged from HK$9 billion in 2005 to HK$22 billion in 2009.
Meanwhile, the Jockey Club’s gross revenue saw slower growth over the same period, rising by 13 per cent from HK$19.3 billion in 2005-06.
Mr Engelbrecht-Bresges said there was little it could do to reverse the trend as it is constrained by tax rules and regulations. It pays a 50% to 75% tax on football betting and horse racing. Macau’s 33 casinos pay 35% of their gross receipts as direct tax to the government. The club takes bets on horse racing, football and lotteries and has no plans to expand.
A spokeswoman from Hong Kong’s Home Affairs Bureau told the SCMP its policy was to restrict gambling to a limited number of authorised outlets, and not to encourage gambling: “We are open to any views that may enhance the overall competitiveness of the Jockey Club for ensuring its effectiveness in satisfying local gambling demand without compromising our … policy.”
Wong Sing-chi, a Democrat lawmaker on Legco’s home affairs panel, said the club should not see Macau as a rival, as the industry there could be complicated by money laundering: “The club is an NGO. But it seems to me they see themselves as running a gambling empire.” Hong Kong Gambling Watch spokesman Choi Chi-sum added that the government should not do anything to encourage betting, said the SCMP.
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