Gamblers in Macau will have to step out of casinos for cigarettes breaks under the government’s proposal to fully ban smoking in the resorts, a move that could hurt the city’s gaming revenues further.
Macau, the world’s largest gambling hub, currently bans smoking on mass market gaming floors. The expanded restrictions will include rooms reserved for VIP gamblers, and abolish the airport-style smoking lounges that are currently allowed, Tong Man Wah, a Macau government information officer, said Tuesday.
Casino operators in Macau are already bracing for the worst results in five years when June gaming revenue data are announced as soon as Wednesday, extending a yearlong slump. Gross gaming revenue for June would probably fall 38.3 percent to 16.8 billion patacas ($2.1 billion), according to a median estimate of six analysts surveyed by Bloomberg News.
“We think consensus expectation of a 2016 recovery is too optimistic as a full smoking ban should hurt VIP revenue,” Karen Tang, an analyst at Deutsche Bank AG, wrote in a June 29 note to clients. VIP revenue could fall 10-15 percent after similar restrictions imposed on mass gambling floors in October led sales there to drop 12 percent, Tang wrote.
The move follows Beijing’s implementation of a public ban this month that imposed fines on property owners who don’t stop defiant smokers. China is trying to lower the health-care costs from tobacco-related illnesses, by cutting the smoking rate among its 300 million tobacco users.
Macau’s executive council also wants to raise the fines imposed on violations to 1,500-200,000 patacas from 400-100,000 patacas currently, according to a statement posted on the government’s website on Tuesday that cited a draft of the law.
It’s not yet clear when the law will be passed, Tang wrote, adding it will probably take place in the fourth quarter due to a legislative backlog, with full implementation in 2016.
High-stakes gamblers would look to reduce their trips to Macau by 17 percent and cut their length of stay after the ban is implemented, according to Tang, citing a third-party KPMG report commissioned by the city’s six casino operators.