Macau’s incoming Chief Executive Ho Iat Seng says he wants to close the loophole that allowed the market’s three casino concessions to effectively become six when the self-governing Chinese territory first opened its gaming industry to competition 20 years ago.
Those concessions are set to expire in 2022, and lawmakers are reported to be nearing completion on an amended gaming statute that ostensibly will determine how new licenses will be awarded and to whom.
Speaking at a press conference in Beijing, where his August election was blessed by the Chinese government, Ho did not say he expects any of the incumbent operators to be denied renewal. He did say the amendment should clearly stipulate a maximum number of concessions—but so did the original statute, which created just three casino concessions. These were awarded from a field of some 20 international bidders to Sociedade de Jogos de Macau (SJM), an entity created by the former monopoly operator, Stanley Ho; Las Vegas-based Wynn Resorts; and to Hong Kong-based Galaxy Entertainment, a newcomer to gaming that initially entered the bidding in partnership with the Las Vegas Sands Corp. (LVS).
When Galaxy and LVS parted ways, the latter prevailed on the government to make an exception so it could enter the market separately; this was done by designating LVS as a sub-concessionaire to Galaxy. This led to the other two demanding sub-concessions of their own. So the three licenses provided in the law became six. MGM Resorts International joined with Hong Kong businesswoman Pansy Ho, daughter of Stanley Ho, for an SJM sub-concession. Wynn sold its sub-concession to Melco Crown Resorts, a partnership between Australian gaming magnate James Packer and Stanley Ho’s son Lawrence Ho. Packer has since exited that partnership.
Ho indicated a certain discomfort with how this was done, terming it a “historical issue” that needs to be addressed.
“The current gaming concession system is a model of three plus three. But actually, the gaming law only stipulates three gaming concessions,” he noted.
He added that if the legislation “stipulates that there will be so many concessions, then there will be that many concessions, and if it states that sub-concessions cannot be issued, then none will be issued.”
According to Ben Lee, a local industry consultant who spoke with the English-language Macau Daily Times, “This appears to be the first time a CE or a CE-designate has admitted that the 3+3 concessions (model) is a legal issue.”
A local attorney and political commentator, Sérgio de Almeida Correia, said, “It makes no difference to me to say right from the law that there are six or eight concessions to be granted, or that they can be up to eight or more, leaving the government the possibility of deciding the opening of the international public tender and how many it will award. What cannot happen is for the law to say that the concessions will be three and then there to be six or a dozen in practice. This is a total discredit of the system.”
Not surprisingly, the chief executive-elect, who takes office in December, promised an orderly process for handling the expiration of the old concessions and the awarding of any new ones. But taken as a whole his words were not encouraging for prospective operators hoping to gain entry to the richest pure gambling market in the world.
Anticipation has been rife, for one thing, that with two plots of Cotai land earmarked for casino development still available, more licenses would be issued. Junket giant Suncity Group has been mentioned at times as a possible bidder. Others include Golden Dragon Group, which is looking to add to the gaming floors it operates in four hotels as a third-party “satellite” of SJM, a system with roots in the old monopoly setup, and SJM “satellite” operator Macau Legend Development. SJM itself also has indicated interest in developing more such “satellites.”
