Clarification is still awaited on how so-called satellite casino business in Macau might be structured, beyond the end of a three-year grace period for current arrangements, which expires at the end of 2025.
That is according to two investors in such business, canvassed by GGRAsia. Both mentioned the satellite casinos’ prospects might see more clarity after the incoming new government of Sam Hou Fai, and his new cabinet, comes on board.
Under a new gaming regulatory framework – coinciding with the current 10-year concessions of the six Macau operators – from 2026, third-party investors in Macau satellite casinos will only permitted to earn a “management fee” via a ‘management company’.
Third-party investors in satellites will not be permitted to share directly in economic value of the satellites’ gaming business generated via a concessionaire’s licence.
Additionally, each management company will only be allowed to partner with a single casino concessionaire.
Hoffman Ma Ho Man, deputy chairman of Hong Kong-listed Success Universe Group Ltd, a satellite investor, told GGRAsia: “I don’t think a direction has been discussed [with casino concessionaires],” on the structure of the “management fee”.
Mr Ma’s company is a partner in Ponte 16 – a waterfront property in Macau’s Inner Harbour district – with a unit of Macau casino operator SJM Holdings Ltd. The gaming venue at the complex is considered a satellite operation of SJM Holdings.
Jay Chun is co-chairman of Hong Kong-listed gaming equipment maker Paradise Entertainment Ltd, controller of the LT Game brand. Paradise Entertainment also has interest in Casino Kam Pek, a downtown Macau satellite casino under the SJM Holdings licence.
Mr Chun said last week in response to media questions, on the sidelines of an LT Game event, that more clarity was awaited on the management fee subject. This might be forthcoming after Macau’s new government takes office later this month, added Mr Chun.
Mr Ma shared a similar expectation as Mr Chun, in response to GGRAsia’s questions on the management fee subject.
“We probably are not going to know [about the management fee] until the new government gets on board. From what we know everything [is] still unclear,” Mr Ma remarked to us.
Macau has 11 satellite casinos in the present gaming concession system, which started in January 2023. Nine of those rely on the rights of SJM Holdings. The remaining two use, respectively, the gaming rights of Galaxy Entertainment Group Ltd, and Melco Resorts and Entertainment Ltd.
In spite of lack of clarity yet on how the management fee model will work, Mr Ma noted to GGRAsia that he had confidence there could be continuity of gaming and non-gaming operations at Ponte 16 beyond the grace period, which ends on December 31, 2025. Such confidence was on the back of the property’s “mass-oriented” approach, said the executive.
Brokerage CLSA Ltd had touched on the satellite topic in a Macau lookahead report regarding 2025, issued on Friday.
The institution stated: “There have been discussions regarding satellite casinos… when [the] transition period… [ends on] December 31, 2025.”
CLSA analysts Jeffrey Kiang and Leo Pan added: “In our view, whether some of these casinos will be discontinued shall depend on their performance rather than any legal consideration.”
They further noted: “We do not think acquisitions of satellite casinos’ premises by concessionaires to sustain operations after 2025 as likely.”
The CLSA team also observed: “It remains unclear how… the ‘management fee’ for casino manager [management company]… will be determined after 2025. However, as a viable solution for both [gaming] concessionaires and managers, we think the fee will be based on satellite casinos’ performance in 2025; while there should also be certain step-up terms possibly linked-with inflation.”
