Leong Still Cagey About Macau Concessions

Macau Secretary for Economy and Finance Lionel Leong (l.) continues to dodge questions about the upcoming gaming license retender, set to begin in 2020. Leong says the government is still “analyzing” the matter. With the SJM and MGM concessions expiring next year, it’s likely they will be extended to 2022 when all other concessions are due for renewal. 


Leong Still Cagey About Macau Concessions

The re-tender process for Macau gaming licensees is schedule to begin in 2020, but government officials in the city are taking their time releasing details of the process for anxious operators.

Secretary for Economy and Finance Lionel Leong recently told local media that officials are still “analyzing” the situation, in which six concessionaires will vie for the right to continue operating their billion-dollar concessions in the world’s top gaming destination.

Two of the license concessions will expire in March of next year: that of SJM and its sub-concession, MGM China. The concessions of the remaining four—Sands China, Wynn Macau, Melco Resorts & Entertainment and Galaxy Entertainment—will expire in 2022. Some industry observers expect the government to offer two-year extensions to SJM and MGM, so that all the concessions expire in 2022.

Leong’s public comments on the matter were vague. “We are aware of the situation, and we’re working on how we can proceed with the related works,” he recently told reporters. “Of course, we take a comprehensive view on the whole of Macau’s gaming industry. We will continuously collect different opinions from the public.” He added that the public will be “duly informed” once the government’s assessment is complete.

“As I have said before, the considerations are based on how the gaming industry can help Macau to become a world center of tourism and leisure, and how the industry can remain competitive regionally and internationally,” he added.

Leong also commented on the prospects for the gaming industry for 2019. Some investment analysts say GGR in Macau could decline in the first half of the year. “We hope that the gaming revenue trend will be stable for 2019—and if eventually it shows slight improvement compared to 2018, it can be considered as quite a good performance already,” he said.

GGR for 2018 was almost MOP302.85 billion (US$37.5 billion), up 14 percent year-on-year over 2017, marking the second straight year of growth following a spike of 19.1 percent in 2017. Before that, the industry suffered three consecutive years of year-on-year decline after a crackdown on money laundering and corruption by Beijing. That crackdown was accompanied by orders from Chinese President Xi Jinping that Macau diversify its economy beyond gaming for greater economic sustainability.

“The competitiveness of the gaming industry here is not only about gaming itself, but also the increase in non-gaming elements,” Leong said. “And unlike the other regional competitors, our difference is that we can provide consumers quite a range of options in non-gaming offers. This helps boost their spending on the various offerings here.”

Steve Vickers, CEO of Steve Vickers and Associates, believes the Macau government will extend the concessions until 2022, “so as to deal with them all at once; such a move would (also) buy time.”

In the last quarter of 2018, mass-market baccarat drove citywide GGR growth with revenues up 18.7 percent to MOP$27.9 billion, a trend that is expected to continue. Mass baccarat was up 9.8 percent, and VIP baccarat a more modest 4.7 percent. Slots revenue was up 8.3 percent year-on-year for the quarter to MOP$3.9 billion, with the number of machines in the jurisdiction also up from 15,622 to 16,059.