In a February 7 filing, Melco Resorts & Entertainment noted that it may have to transfer ownership of its Studio City resort in Macau due to a proposed change in Macau gaming law.
Studio City International Holdings is majority-owned by Melco, but other investors control more than 38 percent of the unit, according to corporate information. Studio City International stated: “At present, we, and not the gaming operator, own the premises of Studio City casino.”
One provision of the proposed gaming law requires all operators to own their casino premises. The change originally was viewed as targeting the city’s satellite gaming halls. Those smaller venues are controlled by third parties but operate under the umbrella of an existing licensee’s rights.
Studio City International said: “In order to comply with the requirements of the proposed law, if enacted under its currently proposed terms, in order for the gaming business to continue at the Studio City casino, we would be required to transfer the Studio City casino premises to the gaming operator.
“For that purpose, we would need to seek an amendment to the terms of the Studio City land grant and comply and complete various other administrative procedures for which the Macau government’s consents, approvals and authorizations are required,” it added.
According to GGRAsia, the company stated that if it were “unable to obtain” all the necessary approvals and complete all of the required procedures within the three-year transition period, as suggested in the draft law, that “could have a material adverse effect” on its casino operations, “including its suspension or cessation.”
But it added: “It is not clear from the proposed law how this would affect the status” of the firm’s “existing services agreements or the arrangements implemented in such agreements after the three-year transition period.”
The draft gaming law underwent a first reading in the city’s Legislative Assembly on January 24, and is now in committee.
Satellite casinos have been given a three-year period to regularize their operations under the amended draft law. However, the legislation still lacks many details.
“There is no clarity with the proposed new law. The (buildings) must be self-owned, but it doesn’t say whether that has to be 100 percent, or whether it can be 51 percent,” said Ben Lee, managing partner of iGamiX Management & Consulting. “That makes a big difference.”
Lee said, “It looks like the government may not have delved deeply enough into the current satellite structures,” Lee said.
