The six Macao concessionaires have their licenses extended until December; the bidding process could start as early as the end of July
The Government of the Macau Special Administrative Region (SARM) approved requests from the six existing operators in the city to extend their licensing agreements for games as of December 31, 2022, understood. Before approval, JP Morgan say it expects the new public tender for Macau gambling licenses to begin in late July or August.
Extensions to the concession contract were signed at the government headquarters on Friday by Chief Executive Ho Iat Sengwith representatives respectively SJM Resorts, SA; Wynn Resorts (Macau), SA; and Galaxy Casino, SA
Furthermore, representatives of the Gaming Inspection and Coordination Office witnessed the signing of contract extensions by the three aforementioned companies with their respective sublicensees: MGM Grand Paradise, SA; Melco Resorts (Macau), SA; and Venetian Macau, SA.
Taking into account that “the process of the new public tender (…) will not be concluded before the expiration of the concession period, the exceptional extension of the concession period (…) will not only be ensure the smooth running of the public tender procedure but will also contribute to the maintenance of social stability, namely the stability of the labor market,” reads a dispatch from the Chief Executive published in the Official Journal on Friday. the dispatch, signed by Ho Iat Seng on June 20enters into force today (Friday 24 June), date of publication.
In return for the extension of the concession period for the operation of games in casinos, concessionaires/sub-concessionaires will pay MSAR an additional 47 million patacas ($5.8 million), according to a statement issued by the Government Information Office. In addition, “gaming concessionaires/sub-licensees will have to put in place a guarantee of compliance with social commitmentswith a view to providing guarantees to their workers within three months of the signing of the extension of the contracts.”
The government adds that through the new amendment to the contracts, the authority applies the retrocession of the casinos and all their equipment and utensils to the Region after the termination of the concession, in accordance with Law no. 16/2001 (Macau Gaming Law). This is “to ensure that future concessionaires for the operation of games of chance in casinos can continue to use existing gaming facilities, guaranteeing perfect coordination between the old and the future concession”.
Shortly after Macau lawmakers on Tuesday approved the new gaming law allowing six licenses for 10-year terms, brokering JP Morgan said in a note this they expect the new public tender for Macau gambling licenses to start in late July or Augustbasing their expectations on the timing of a 2001 tender. Additionally, they stated that the outcome of the bidding process could be announced by November.
In the note, DS analysts Kim and Livy Lyu points out: “We recall, for the original concession 20 years ago, that the public call for tenders started approximately 40 days after the [original] law was passed and lasted about three months.”
“Based on this, we expect the auction to start in August (or end of July), the result of which could be announced at the beginning of November“, said the analysts, as reported Macau Daily Times.
Amendments to the Macao SAR Gaming Law No. 16/2001 will give the General Manager the power to terminate a gaming license without legal process if a casino operator violates national security or does not comply with the obligations of a concessionaire, such as paying taxes on time, with the holder having to return their gaming surface/capacity to the government without compensation.
Under the new legislation, the number of new licenses is limited to six, and the new permits will be issued for a maximum period of 10 yearsdown from the current 20 years.
The approval of the new law also comes amid a new Covid-19 outbreak that is bringing the city to a standstill, triggering the casino shares will fall as much as 3.38% earlier this week. For eight months, Macau has not recorded any cases of Covid-19 in the local community.
Over the past two months, the battered industry has suffered a drop in revenue. In April it recorded its worst losses in 18 monthswith gross gaming revenue (GGR) only reaching MOP2.68 billion ($331.5 million) while Macau faced tighter border restrictions whenever new outbreaks occurred in neighboring regions.
Next, in May, the GGR fell to MOP 3.34 billion ($413.2 million), the second worst figure since travel resumed for mainland China visitors in September 2020. According to analysts at JPMorgan Chase & Co, including DS Kim, Macau’s GGR could hit ‘near-zero levels’ for at least a few weeks until the situation is under control.