In his annual policy address last week, Macau Chief Executive Ho Iat Seng said the local government may extend gaming licenses in the Chinese territory beyond their original expiration date of June 2022.
The process may be delayed due to a planned comprehensive overhaul of local gaming regulations, details of which were first announced in September. Those changes may take longer than expected to finalize and implement.
Under current law, the original 20-year concessions can be extended by up to five years; in fact, SJM Holdings and MGM China, whose concessions were due to expire in June 2020, both were granted two-year extensions to bring them in line with the other deadlines.
Speaking to the legislative assembly on November 16, Ho said, “After the (revision of gaming) law is completed, we will gradually implement the relevant works. Please don’t worry. If the works could not be completed on time like the tender process, we could extend [the licenses], a condition that has already been stipulated in the current framework of law. We have the mechanism.”
Ho also addressed the media, saying, “We will ensure that the city’s gaming industry develops in a healthy way, and this is also understood by the six operators.”
Among the changes proposed in September were the elimination of the subconcession system; a reduction in the current 20-year concession term; the installation of a government delegate at every operating company, for greater oversight; new regulatory requirements for concessionaires; and the pre-vetting by the government of shareholder dividends.
In September, investors saw the revisions as a sign that Beijing was cracking down on the city’s gaming industry. That led to a short-term panic and a $20 billion selloff in gaming stocks. A six-week public consultation period followed, ending on October 29. The government now has 180 days to review the comments and present a report, reported Asia Gaming Brief.
Analysts expect the concessions to be extended, but briefly, for six months to a year, to give the government more to complete the tendering process. “While it’s not impossible to finish all this before the expiry, we do think it’s a very tight schedule,” said J.P. Morgan.
Meanwhile, gaming operators are doing all they can to cooperate, and have been publicly enthusiastic about the proposed changes, which also includes the diversification of the local economy beyond gaming. According to the Macau Daily Times, Clarence Chung, board director of Melco Resorts and Entertainment, said that company supports the government’s move to amend gaming laws to keep up with changes in the industry.
Echoing an earlier statement by Melco Chairman and CEO Lawrence Ho, Chung said, “In the past years, we have invested more than MOP100 billion ($12.460 billion) in Macau. Looking into the future, we will continue our investments as a representation of our confidence in the city in the mid- to long-term.”
Galaxy Entertainment Group Chairman Lui Che Woo also hailed the proposed amendments. “We believe that the suggested proposals, if implemented, would improve the regulatory oversight of the industry, increase the sector’s transparency and secure the long-term viability of Macau’s most important pillar,” he said. “The key points that were listed within the consultation paper were not a surprise to those who closely follow Macau.”
Kenneth Feng, president and CFO of MGM China, said, “As China further develops, we will enjoy prosperity, I have confidence in that.”
Ho said the retendering process is based on three benefits for Macau: to “enrich the content of Macau as the world center of tourism and leisure; promote the stable development of the gaming industry; and protect the employment of local residents and their opportunities of promotions.”
He added, “We should actively develop more competitive non-gaming elements in the market and continuously push gaming concessionaires to bear more CSR (corporate social responsibility).”
Touching on the impact of Covid-19, he said, “The tourism industry and overall economy are expected to recover gradually, while the employment situation is expected to stabilize and prices are expected to remain stable. However, the economic recovery is still uncertain.
“If the vaccination rate reaches 80 percent in Macau, package tours from the mainland to Macau would likely be resumed and we would try to negotiate for the possible resumption of the Individual Visit Scheme (IVS) e-visa, which would bring back a great number of visitors to Macau,” Ho said.
It might be 2025 before the visitor volume reaches 91 percent of the pre-pandemic level recorded in 2019, according to the Macao Government Tourism Office (MGTO). The year before Covid, more than 39.4 million tourists visited the gaming hub. In 2020, the first year of the pandemic, visitation fell by 85 percent, for under 5.9 million arrivals, and most of them came at the start of the year, before the global crisis developed, according to previous data issued by the tourism bureau.
Meanwhile, according to GGRAsia, Macau’s Gaming Inspection and Coordination Bureau (DICJ) thanked operators for “actively cooperating” with the Covid-19 citywide testing program and hosting testing sites at their respective facilities.
