The announcement of a 10 percentage point tax hike on VIP casino gross gaming revenue (GGR), which applies to Malaysia’s only casino-sanctioned venue, Resort World Genting (pictured), is starting on a lower-than-expected basis for most investors, GGRsia found.
An industry source familiar with the matter said the points in the VIP GGR tax were raised from 10% to 20%, not from 25% to 35%, which applies to popular market table games.
The Malaysian government announced a 10 percentage point tax increase on GGR taxes in its budget on Nov. 2.
Industry commentators previously told GGRAsia that margins for high-roller play are typically thinner than popular diversity because of the large reinvestment costs casinos operators typically incur when playing VIPs, such as fees for external junkets or rebates for loss of house management players.
“In the background, there is a history of VIP gaming rates being cut from 25% to 10% during the SARS pandemic in 2003,” a source said, referring to outbreaks of severe acute respiratory syndrome that have created public health emergencies and depressed the tourism sector in several markets across Asia.
“Most people thought the VIP gaming tax rate was still 25% at the time of the budget,” the person said.
Singapore-based investment brokerage UOB Kay Hian Pte Ltd cited its own “channel check” as a source of information that flagged the new VIP GGR rate at 20% instead of 35%, in a note released on Wednesday.
“Investors can now refocus on Genting Group’s 2019 catalyst, given the negative impact of the gaming tax hike has been priced significantly, and the lower-than-expected VIP gaming tax is serving as a pleasant surprise,” the brokerage said, referring to Genting Malaysia Bhd’s parent company.
In light of the new information, casino operators may not have to reduce indirect costs as dramatically as they are concerned, it added.
Genting Malaysia said in a Nov. 7 filing with Bursa Malaysia that it was “evaluating the overall impact” of additional taxes announced by the federal government.
The statement added that the company would take “appropriate next steps” that include “a review of marketing spending and cost structures to mitigate the impact of the tax increases.”
Analysts have previously noted that cuts in casino marketing spending could lead to a reduction in player incentives in some situations, and thus a reduction in play volume.
In addition to operating Resort World Genting near Kuala Lumpur, the capital of Malaysia, the company also operates casinos in the United States and the Bahamas, the United Kingdom, and Egypt. In the latter four markets, other – local taxes on the gaming business are known to apply.
Shares of Genting Malaysia Corp Genting Malaysia have been hit on local exchange Bursa Malaysia since the country’s budget announcement on Nov. 2.
BY: 파워볼실시간