On July 27, the Macau government announced the names of nine officials charged with awarding up to six new casino concessions in the special administrative region (SAR), the only place in China where gambling is legal.
The committee members are:
- Secretary for Administration and Justice Cheong Weng Chon
- Secretary for Economy and Finance Lei Wai Nong
- Secretary for Social Affairs and Culture Ao Ieong U
- Secretary General of the Executive Council Hui Lai Fong
- Director of the Economic and Technological Development Bureau Tai Kin Ip
- Director of the Macao Government Tourism Office Maria Helena de Senna Fernandes
- Director of the Gaming Inspection and Coordination Bureau (DICJ), Adriano Marques Ho
- Director of the Judiciary Police Sit Chong Meng
- Director of the Public Works and Transport Bureau Lai Weng Leong
The gaming tender officially launched two days later, on July 29, and the process is expected to be complete by year’s end.
The committee was expected to choose a chairman and secretary at the first meeting on Friday. The government will also establish a formal gaming commission to help the city’s Chief Executive formulate policy, and to also weigh in on regulations and operations. The commission chair may invite private companies to attend the body’s meetings, but they won’t have voting rights.
Next up is the actual bidding via an RFP process. Most analysts expect the incumbents—Sands China, Wynn Macau, MGM China, Galaxy Entertainment, SJM Holdings and Melco Resorts—to maintain their licenses, with the new terms to begin in 2023. As reported by Reuters, if any current operators fail to secure a new contract, they will be banned from doing business in the city, and walk away from casinos in which they likely have invested billions of dollars since the original licenses were awarded, in 2022.
The task of choosing the next generation of casino operators unfolds as Macau emerges from its worst outbreak of Covid-19, which forced a 12-day closure of businesses, including casinos, in July. The casinos have since reopened, but with only half the staff and a fraction of open table games. Simply put, according to a NASDAQ report, “there is no business, as restrictions are only being lifted slowly.”
The Beijing government’s strict zero-Covid policy clamps down on borders and businesses at any outbreak, however minor. As a result, gaming operators are now burning through about US$600 million in cash each month, and could see little to no income for months, analysts say.
According to Inside Asian Gaming, Macau’s casinos and retail malls resemble a “ghost town,” even as the city emerges from its latest shutdown. A visit to several casinos—the Grand Lisboa, MGM Macau, Wynn Macau and Venetian Macao—showed that most slot machines were open, but less than 20 percent of gaming tables were available. At Grand Lisboa, 10 gaming tables were open on the mass floor, and around 20 gaming staff were on duty. But there were only eight customers. Non-gaming areas were deserted.
Though confirmed infections have dwindled to the single digits, IAG said, the city is in a state of “economic zero” given the impact of strict anti-epidemic measures.
In a recent memo cited by GGRAsia, brokerage Daiwa Capital Markets Hong Kong said border restrictions between Macau and Zhuhai must “revert back to the seven-day nucleic acid test requirement during fourth quarter 2022 … for a material recovery” of Macau’s gaming industry. It added, “We reiterate our view that a Covid policy turnaround is now required for Macau, as ‘Covid-zero’ is not a realistic goal over the long term.”
The gaming industry may only post US$7 billion in revenues this year, which would be a 35 percent drop from 2021 and 81 percent lower than the pre-pandemic level in 2019, according to estimates by Morgan Stanley analyst Praveen Choudhary.
Meanwhile, it’s not just the gaming operators burning cash. The Macau government has done the same this year to make up for the lack of gaming taxes, and expects that practice to continue.
Speaking at a video conference meeting of Macau’s Legislative Assembly, Secretary for Economy and Finance Lei Wai Nong said, “The government has used MOP$35.1 billion (US$4.34 billion) in fiscal reserves, of which MOP$14.6 billion was to cover the (shortfall in Macau special gaming tax collection) and another MOP$10 billion (US$1.24 billion) was to provide financial assistance.”
Lawmaker José Maria Pereira Coutinho expressed concern for the Macanese, who have taken a financial hit as a result of the shutdowns. “Macau people are very well behaved and have listened to the government’s zero-Covid policy,” he said, “but at the same time, many Macau citizens have had zero deposits.”
In response, Lei said, “The financial assistance is targeted at employees and businesses, and the government will provide further assistance amounting to MOP$10 billion, which is currently being prepared.
“This (outbreak) will not be the last,” Lei warned, “and we will use ‘MOP$10 billion’ many more times.”
Director of the Financial Services Bureau Iong Kong Leong added an even more somber note, warning that cash on hand is not unlimited. Though it now sits at MOP$557.3 billion, he said, “Don’t think that Macau’s reserves are inexhaustible.”
