Au: Please, no more secrecy
Starting in 2020, Macau’s billion-dollar gaming concessions will begin to expire in a rolling process that will continue into 2022. For the major licensees to win new concessions and continue to do business in the world’s largest gaming hub, they must pass muster with Beijing and the local government in numerous categories, well beyond the financial success of their properties. Frustratingly, however, details of the tender process are still mighty scarce.
On November 25, Macau Secretary for Economy and Finance Leong Vai Tac confirmed that the government will launch an open tender process for the coveted gaming concessions. Currently, the city hosts three concessionaires (SJM, Wynn and Galaxy) and three subconcessionaires (Sands, MGM and Melco). Leong said the government is mostly interested to see if they’re helping Macau develop into a world tourism and leisure center and keeping the local industry regionally competitive.
That much we know. But Martin Williams, Asia editor of Gambling Compliance, said there’s more to it than that. According to the Macau News Agency, Williams recently spoke before an industry audience, saying, “Overall, now all the influence is coming from Beijing. That means that will be more important for the operators in the new concession meeting to be in Beijing’s good books.
“The business cliques that have run Macau for so long are bit-by-bit replaced by people that have greater loyalty to Beijing—technocrats,” Williams continued. “As far as Beijing is concerned, Macau’s economy, its stability and its symbolism are too important to leave to Macau’s executive and legislative branches.”
One important if underappreciated factor on the table will be how the operators treat their employees, he added. “It is not just about non-gaming, it is about providing livelihood, providing training, providing opportunities. This is something people often don’t talk about but it actually carries a lot of weight.”
Pro-democrat legislator Au Kam San is irked by the lack of detail on the process, especially this late in the game. “This should not be a subject dealt with in secrecy,” he insisted. “The sooner the information is out, the better it is for the public or the gaming firms’ employees, as well as the firms themselves and those that may want to invest in here in the future.”
Leong responded in vague fashion, telling legislators only that after the present gaming concession contract is over, “we’ll be inclined to conduct an open tender.”
Macau Chief Executive Fernando Chui Sai On was no more forthcoming. In his 2019 policy address, he said the rebidding process will be “public and transparent,” but added little more detail.
“Before the licenses expire by 2022, we will be launching the tender process,” he said. “Regarding those licenses that expire two years earlier, in 2020, we’re studying how to deal with it. There is still some time to go before 2020 and 2022. We will inform the public about this matter in an open and transparent manner.”
For now, the guessing game will continue. Williams said some gaming operators may be at risk if the government opts to limit foreign ownership in casinos. That would be bad news for U.S.-based gaming companies such as the Las Vegas Sands Corp., MGM Resorts International and Wynn Resorts. There may be little risk of that, as each of the operators has invested billions in the market, and the loss of their licenses would not mean the forfeiture of their land concessions.
Of course, there may not be as much urgency to the situation as the calendar suggests. During the plenary session, Leong reminded listeners that according to gaming industry law, the chief executive is within his power to extend a particular gaming concession on expiration, one time or multiple times for up to five years.
That’s not necessarily soothing information to some. In a November 20 note, U.S.-based brokerage Telsey Advisory Group said, “We are becoming more and more concerned over the lack of news surrounding gaming concession renewals.”
“In last year’s policy address, Mr. Chui had suggested that mid-2018 would be an appropriate time to address this issue,” wrote analysts Brian McGill and Alec Cummings. “Moreover, last year the Macau government commissioned two studies on the gaming industry concession renewals, both of which were expected to be completed by the third quarter of 2018. We are obviously not in the third quarter anymore, and we are well past ‘mid-2018.’ Given this, and considering the current geopolitical tensions between the United States and China, we are watching this situation closely.”
According to GGRAsia, the Macau government has commissioned at least two studies on the outlook for the city’s gaming sector in the period between 2020 and 2030. Last December, the Economic Bureau confirmed that the research was ongoing, but a year later, has released no results.
