Macau Chief: Budget Deficit Awaits if Gaming Underperforms

Macau’s leader highlighted budget concerns shortly after the special administrative region reported a slowdown in its gaming revenue growth. This highlights the region’s strong dependence on gaming despite its recent efforts to diversify its revenue streams.

Macau’s Chief Warns of Possible Financial Trouble

Macau, which is a special administrative region of China and the only place where Chinese nationals can gamble legally, has long relied on its casinos for its revenue. During the COVID pandemic, the region’s gaming economy was badly hurt due to travel restrictions and China’s Zero-COVID policy.

Since then, the SAR has been trying hard to diversify its sources of income and end its continued reliance on gambling. However, this will not happen overnight, as suggested by recent comments by Macau’s head.

Sam Hou Fai, Macau’s chief executive officer since 2024, just warned of potential financial hurdles. In comments to local lawmakers, he warned that the SAR risks a budget deficit if its gambling revenues continue to decline.

The Macau chief suggested that the region will experience such a deficit if the revenues decline to under $1.88 billion a month. His comments came not long after the publication of Macau’s Q1 figures, which outlined the suboptimal performance of the Macanese casino sector.

Macau’s Q1 Results Were Lower Than Expected

For reference, Macau’s gaming revenues for the first quarter of the year stood at $7.22 billion, or $2.4 billion a month.

While this figure represented a year-on-year increase of 0.6%, it was a far shot from the government’s forecasts, which counted the Q1 report to outline figures closer to $2.5 billion a month.

While the monthly figure is still in line with the monthly revenue that Macau needs to avoid a budget deficit, it still highlights a somewhat precarious position for the region.

Macau Needs to Diversify Its Revenue Streams

Sam Hou Fai emphasized that the region is still very dependent on gaming. For context, Macau relies on the industry for a staggering 4/5 of its total tax revenue. The CEO acknowledged that, noting that the balance is a serious issue.

The imbalance in our fiscal structure is serious and we must maintain a strong sense of crisis awareness.

Sam Hou Fai, CEO, Macau

Sam added that Macau’s expenditure is great despite its small size, which is why it must prepare for “extreme circumstances.”

The slowdown of the Chinese economy has been another major concern for Macau and the country as a whole.

Because of that, Macau continues its efforts to diversify its revenue streams continue. To that end, the local authorities have asked the six casino concessionaires to create additional sources of revenue by investing in non-gaming facilities and experiences.