Macau-based gaming scholar Wang Changbin (pictured in a file photo) has questioned the “efficiency” of using a public concession approach – with 20-year-long licences – for managing the city’s casino industry once the current six concessions expire in June 2022. He suggested instead fresh licences should be only “10 years” in duration, with a “review and licence renewal” to be imposed every five years. The shortening of the concession period would enable the government to have the “flexibility” in responding to any rapid market changes.
But the academic appeared to stop short of calling for the concession system to be scrapped, referring instead to “reforming or even overhauling” it.
His commentary was in an article titled: “The casino gaming concession system in Macao: past, present and future”. It was published in the current issue of the University of Nevada, Las Vegas Gaming Law Journal. Professor Wang is the director of Centre for Gaming and Tourism Studies at Macao Polytechnic Institute.
Mr Wang noted in his article that the purpose for a 20-year concession period was “to make sure the concessionaires make a profit from the concession.” But he argued that “a significant disadvantage” of the extended period was that it was “difficult for the government to replace a possibly unsatisfied concessionaire or introduce more operators into the market in a timely way.”
The scholar said the gaming landscape was undergoing rapid changes in Asia, with increased competition. “But with the current limitation of the concession system, the Macau government cannot respond to the changes quickly,” Mr Wang stated.
“A 10-year concession should generally be long enough for an operator to develop a large-scale project while a review and renewal every five years extends the government flexibility to make some changes if necessary,” he added.
Mr Wang said Macau’s concession system owed much to custom and practice. He noted such system had been developed while Macau held an “almost-monopolistic position in legalised casino gaming in East and Southeast Asia”, and gaming was explored locally by a single operator.
“The situation nowadays is different,” said the scholar, pointing to increased regional competition and the fact that Macau now boasts six casino concessionaires.
A public retender under the concession system has been mentioned by the government as the route for fresh rights after 2022.
Some voices have called instead for a licensing system, possibly on a per-property basis, but Mr Wang said a licensing approach probably had “little chance of adoption in Macau”, for “historical and political reasons”.
However, he expressed concern that a retender process via continuation of the concession system could cause “uncertainty” and “loss” of “efficiency” in the Macau gaming market.
Retender inertia
“Due to the fears of possible loss of their concession status after 2022, some concessionaires are hesitating to invest more into Macau’s market as the concession expiration date approaches,” wrote Mr Wang.
He added: “It is not easy in practice to replace a current operator with a new one.”
Macau’s Chief Executive, Ho Iat Seng, told local media last week that he could not comment on the possibility of delaying a public retender process. The Macau government had previously flagged its intention to launch the retender, noted Mr Ho, but said a review of the city’s existing gaming law – including a public consultation process – was a necessary prior step.
The Macau government has not made any public comment so far on whether there might be any amendment to the number of entities allowed to participate in the Macau casino market after June 2022.
For his part, scholar Mr Wang noted in his article: “Macau does not have the land resources to build new casinos. On the other hand, if newcomers operate casinos under the same roof” created by a displaced operator, that might also retain rights to control accompanying non-gaming facilities beyond 2022, “it would produce many managerial problems”.
In the event that the Macau government were to decide to keep all the existing gaming concessions upon completion of a public retender, the whole process would appear “redundant” and “wasteful”, and might bring “awkwardness” to the Macau government, the scholar said.
“The current concessionaires should be offered a way to negotiate to renew the concession if the government hopes to retain them in the market, while other prospective operators may compete for the new concessions if the government decides to increase the number of concessions,” Mr Wang suggested in the article.
