Macau’s “satellite” casinos, a peculiar outgrowth of the Chinese custom of sharing the wealth, have a long past. But if the government is truly serious about transforming the city into something more than a booming gambling enclave, there may be no place for them in its future.
At least that’s the opinion of Rui Pinto Proença, a partner in MdME, one of the territory’s leading law firms.
“Do these satellite casinos contribute to creating a world-class tourism destination? I think many of them as they stand today would (find that) difficult to achieve,” Proença said, speaking recently on local television news network TDM.
The satellites date back to the monopoly era, which ruled over for 40 years by Stanley Ho’s Sociedade de Turismo e Diversões de Macau, which parceled out casino franchises to friends, associates and family members. They built the casinos and ran them, and STDM shared in the revenues. It was, needless to say, a very different time. The territory was governed, somewhat in absentia, by Portugal, travel to and from China was nonexistent, and the industry was a much smaller, and seedier, affair catering mainly to gamblers from British-ruled Hong Kong.
The system still operates under that model, and it’s grown to 20 properties, 16 of them under the umbrella of STDM’s post-monopoly successor, Sociedade de Jogos de Macau, three under Galaxy Entertainment and one under Melco Resorts & Entertainment. And several have morphed into quite impressive operations on their own. None, however, command the resources that enabled the six current concession holders to transform Macau with billions of dollars in Las Vegas-scale investment to serve the tens of millions of gamblers and tourists who began flooding into the city from China after the territory reverted to Chinese rule at the start of the new century.
In the past, the financial limitations of the model were not an issue. What Proença suggests, however, is that they will be now that the government has to consider how to manage, and possibly rebid, the existing concessions when they expire in 2022𑁋a process which, whatever form it takes, is supposed be governed by Macau’s official aim of becoming a “World Centre of Tourism and Leisure”. Beijing will be watching that process closely and undoubtedly will wield considerable influence over it.
The question for Proença is whether the satellites could pull their weight. He doubts it.
“You could argue that satellite operators have a lot of local experience, but with a few exceptions they are yet to prove they have the ability to build and operate world-class IRs,” he told TDM.
Which is the consideration that certainly would come into play in any scenario in which the concessions are offered for tender to a global market.
“It’s a very challenging question, asking what will happen to the satellite casinos,” Proença said. “I don’t think anyone is happy with the current framework, not even the satellite casinos themselves. Obviously, they want to continue operating, but they’re not completely happy that they are operating under an umbrella and a set of contracts that doesn’t give them the ability to finance like a stand-alone casino license can.”
But should they be scrapped entirely? Proença, for one, isn’t sure.
“They are stakeholders, they have contributed, they should be consulted in the process and given the chance to bid for new concessions if (bids) are opened. (But) if some of them bid against international operators they will be placed in a very difficult position because it is hard to compete with companies that have created world-class tourist destinations in other parts of the world.”
