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Macao extends expiring casino concessions for 6 months
Hotel owners expected to step up lobbying against ban on hosting gambling halls
PAK YIU, Nikki staff writer
March 3, 2022 18:06 JST HONG KONG -- Macao will extend the operating rights of the city's six casino companies by six months until year-end as it revises its gaming law ahead of bidding for new long-term concessions.
Secretary for Economy and Finance Lei Wai-nong said on Thursday that the companies have been told they need to request the extension to their operating rights which are now set to expire on June 26, according to public broadcaster TDM.
It is unclear whether the government will charge for the extra time. SJM Holdings and MGM China Holdings each paid 200 million patacas ($24.85 million) in 2020 to extend their tenure by two years to this June, aligning them with the other four operators' terms.
On that basis, Bernstein Research analyst Vitaly Umansky calculated on Thursday that the six companies may each be asked to pay about $6 million.
Sands China and Galaxy Entertainment Group each told Nikkei Asia that they would submit extension requests. The other four operators did not respond to requests for comment, but would be expected to apply too given their huge investments in facilities in the city.
Macao's Legislative Assembly is reviewing the government's proposed gaming law amendments in closed-door committee sessions after giving its preliminary support in a near-unanimous vote in January.
Under the proposed amendments, concessionaires would be granted 10-year operating rights. The term would be renewable for three years, but the operators would also be subject to an interim review every three years. The original concessions issued to new operators in 2002 were for 20 years.
Operators' allotments of tables and slot machines would be subject to annual performance reviews based on revenue targets. The authorities would also begin to evaluate operators in terms of how they "uphold national security" and they would have to notify the government about plans to distribute capital or make other "major financial decisions."
Other provisions would restrict the operations of junket companies. This follows a crackdown that has seen the owners of the two largest agencies arrested for alleged money laundering and other crimes.
Another would mandate that all casinos, within three years, be located on properties owned by the operators. This would affect some 20 "satellite casinos" located in hotels owned by third parties, mostly in partnership with SJM.
Alidad Tash, managing director of gaming consultancy 2NT8, said these third-party owners will welcome any chance to lobby to water down or kill the satellite casino provision. "Now they have more time to figure out a way to either delay or eliminate that existential requirement," he said.
With the upcoming concession tender hanging over them, the casino companies have been effusively positive in their public comments about the draft law.
"The amended law in general, I think we are quite pleased with the various components of it," said Craig Billings, president and chief financial officer of Wynn Resorts, on a call with analysts last month. "And the process, as we've said many times, has been impeccable in terms of administration."
Macao's gaming regulator announced on Tuesday that the city's casinos generated 7.76 billion patacas in gross betting revenue last month, up 6% from a year before and 22% above January's level.
On a per-day basis, it was the sector's best month since last May. Jefferies analyst Andrew Lee said February is likely to be a "near-term peak" for industry revenue as Lunar New Year travel boosted results and the city is unlikely to relax its COVID travel controls further for the time being.
Additional reporting by Zach Coleman.