Key financial details of the up to six new Macau gaming concessions might only be clarified once “provisional” winning bidders are decided, said a Thursday note from JP Morgan Securities (Asia Pacific) Ltd.
“From what we understand, the final details and specifics – e.g. size of investment commitment, concession premium, possible lease fee for reverted gaming assets, etc – can… be fine-tuned during the negotiation phase, after which (formal) concessions can be awarded to six concessionaires with official contract signing,” wrote analysts DS Kim and Livy Lyu.
“Once all the biddings are collected by mid-September, the government will review the proposals and announce six ‘provisional’ winners before the end of the year,” they said. “Our best guess is end-November, if history is any guide”.
New concessions will have a 10-year term. The chairman of the Macau committee tasked with vetting bidding firms said on Thursday that he hoped the process could be completed this year, in time for the new concessions to start on January 1, 2023.
The fresh public tender for Macau gaming rights is accepting bids from Friday (July 29) until September 14, 2022.
One of the current six concessionaires, MGM Grand Paradise SA, which holds the licence for MGM China Holdings Ltd’s casino operation in Macau, issued a statement on Thursday affirming it would “participate in the public tender” for fresh concessions.
“MGM Grand Paradise will continue to unswervingly support the Macau SAR government to promote economic diversification, helping Macau further consolidate its position as a world centre of tourism and leisure as well as scale new heights for its economic development,” added the statement.
MGM China runs the MGM Macau gaming resort on the city’s peninsula, and MGM Cotai in the newer Cotai casino district.
JP Morgan noted in its Thursday memo: “As specified in the tender document previously, the government will assess various aspects of the bidding, such as their [bidder’s] plans to expand the source market to foreign countries, social responsibilities that operators intend to undertake, and the level of benefits that operators’ planned investments in gaming and non-gaming projects can bring in.”
The analysts added: “That said, we have been, and still are of the view, that six incumbent operators will be the next winners of the concessions.”
André Cheong Weng Chon, Macau’s Secretary for Administration and Justice, the tender committee chairman, mentioned in his Thursday remarks, the power of a Macau chief executive to reduce tax payable on casino gross gaming revenue (GGR) as an incentive for operators to bring in more customers from overseas.
Asked on Thursday how the government would assess the trigger and calculate the actual level of tax reduction, Mr Cheong said the topic would be dealt with in a separate regulation.
In other developments, a Thursday dispatch from the Secretary for Economy and Finance, Lei Wai Nong, has defined what were termed the key employees in would-be bidders for Macau casino concessions. These people who would be subject to suitability checks by the local gaming regulator.
According to the dispatch, they are described as those holding the “highest position” in the following areas: gaming operations; administration; financial matters; human resources; compliance matters; legal matters; and information technologies.
