The lesson on taxes never seems to be learned. Whether it is high corporate taxes in the US forcing business out of the country or migration away from high income tax states, taxes do matter. In this case, at least one Australian gaming operator will capitalize on the large gaming tax differential between Macau and Australia. Macau confiscates 39% of gaming revenue while Australia is somewhere in the low to mid 20s depending on the state. Our sources indicate that the operator has reached an agreement with a Macau junket operator to bring its customers over to Australia in exchange for a 1.6% VIP commission, substantially higher than the prevailing 1.3% rate in Macau. A 1.6% commission would be unprofitable in Macau.
This may be a preview for Macau when Singapore opens in 2010. Singapore will tax VIP table revenues at only a 5% rate and some junkets are already in negotiation with LVS and Genting to operate VIP rooms at those facilities.