Some turbulence ahead, says MS team
Morgan Stanley analysts say the total market value of Macau’s Big 6 gaming operators could reach $146 billion by 2020, just as their licenses start to expire.
Citing the MS report, Asia Gaming Brief reported that the city’s leading industry should see compound annual growth of 13 percent; for July, Macau’s Gaming and Inspection Bureau reported gross gaming revenues of MOP25.3 billion (US$3.2 billion), up 10.3 percent year-on-year. But the license expirations and new competition could bring some turbulence to the market.
“In case of license renewal, it could either have a negative monetary impact or outright loss of gaming profit,” wrote the analyst team. “With the potential opening of Japan and Hainan, the pie could shrink meaningfully.” Japan just completed the legislative process that will introduce three megaresorts to the country. And speculation continues about whether China’s central government will permit any meaningful forms of gambling on the island of Hainan as it works to expand tourism there.
Macau’s casino licensing process may not follow a fixed schedule. Inside Asian Gaming notes that the contracts could be extended by up to five years if approved by Macau’s next chief executive, whose term will begin in late December 2019. Also, the Macau government is likely to extend SJM and MGM’s licenses, which are the first to expire in 2020, until 2022, when the four others expire.
When the license rebidding is finally done, Macau may have a seventh or even an eighth casino concessionaire. Reuters reports that at least one VIP junket operator, Suncity Group, may make a play for its own license; the company is now in the process of developing a $4 billion casino resort in Vietnam.
