Could Macau Satellites Be Performance-Based?

Last month, Macau government officials suggested that they may permit a performance-related system between casino promoters that want to run satellite casinos (l..) and concessionaires that hold the gaming rights.

Could Macau Satellites Be Performance-Based?

In late May, the Macau government indicated that it may agree to some kind of performance-related system linked to turnover between casino promoters seeking to run a satellite casino and the concessionaire holding the gaming rights.

Satellite casinos are smaller properties that are run and promoted by third-party investors, but piggyback on the licenses of the city’s Big 6 gaming concessionaires.

A senior executive at a current satellite told GGRAsia that some kind of performance incentive is necessary to make the satellite model work for the long haul. But the government didn’t clarify if any aspect of the gaming operation itself could be a factor in performance incentives.

Among proposed changes to Macau gaming laws now under review, one would have required casino concessionaires to own all the real estate where satellite gaming operations take place, or else close within three years. This proposed change caused an uproar among some lawmakers, who feared it would put scores of people out of work in an already tough employment landscape.

But that requirement has since been relaxed, with the government proposing to let concessionaires rent casino space from non-licensees. In the interim, several of the city’s more than two dozen satellite casinos closed preemptively. They will not be permitted to reopen, despite the government’s reversal on the policy, said Secretary for Economy and Finance Lei Wai Nong.

Lei told the parliament, “The reason why the government made adjustments to its proposal is because it hopes to achieve a win-win situation. Of course, the government hopes satellite casinos will remain open and hopes to create healthily manageable conditions” for them.

Originally, Macau’s Big 6 casino concessions—held by Wynn Macau, Sands China, MGM China, SJM Holdings, Galaxy Entertainment and Melco Resorts—were due to expire on June 26. The deadline was extended to December 31, but according to Article 13 of the current Gaming Law, cited by Macau Business, the city’s chief executive may grant one or more extensions of those concessions for up to five years. That means the concessionaires could see their terms extended as far out as 2024, subject to the approval of the CE.

However, it looks like the government will pass the new Gaming Law this month and complete the concession tender by the end of the year.

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