Macau casino operator SJM Holdings Ltd confirms it has been seeking a better split in its favour, regarding gaming revenue shared with its satellite casino partners. A factor was that SJM Holdings had been facing high operating expenses and tough trading amid Covid-19 disruptions, its vice-chairman and chief executive Ambrose So Shu Fai (pictured in a file photo) told Hong Kong-based Chinese-language news outlet Ming Pao in an interview, published on Monday.
His published comments did not mention any numbers for current revenue-share arrangements, or what the company was now proposing.
A satellite casino senior executive, who requested anonymity, told GGRAsia that SJM Holdings has recently been negotiating new service arrangements with its satellite partners, including revenue split, with such arrangements due to start next year.
Such talks are independent of government regulatory changes being made to the satellite sector.
The so-called satellite casinos in Macau are mostly casino hotels that have third-party investors or promoters, but piggyback on the licence of one of the city’s gaming concession holders. The traditional economic model for the satellite casino promoters is to rely on the sharing of “revenue” from gaming operations with their respective concessionaire partners.
Two among Macau’s 18 satellite casinos – the Rio Casino and the President Casino, which both relied on Galaxy Entertainment Group Ltd’s gaming rights – had closed down starting in June amid changes to Macau’s regulatory system for such properties, and against the backdrop of the city’s six gaming concessionaires having their respective gaming contracts extended by circa six months, to December 31. Among the 18 satellites, 14 have been using SJM Holdings’ gaming rights.
“We cannot fire people, and we have to pay for our daily operating expenses as usual. The daily cash burn for us is in millions when our business volume is depressed,” Mr So told Ming Pao, referring to the Covid-19 disruptions.
SJM Holdings Ltd reported a first-half net loss that widened to nearly HKD2.76-billion (US$351.6 million), compared to a loss of HKD1.47-billion in the first six months of 2021.
Current trading conditions had also had an impact on Macau operators when they sought to borrow money, Mr So also remarked. But he stressed that the company was committed to bidding for one of the up to six, 10-year, gaming concessions that would run from next year.
Macau’s current six gaming operators are expected to bid for the new 10-year gaming rights, and have until September 14 to do so. The vetting process for the bids is expected to finish within this year, in time for the new concessions to start on January 1, 2023, Macau’s Secretary for Administration and Justice André Cheong Weng Chon mentioned on July 28.
Macau’s revised gaming law – approved by the city’s Legislative Assembly in June – mandates that the city’s satellite casino promoters take on the form of “management companies”. Such entities would not be able to share revenue from gaming operations with their respective concessionaire partners, but there is a three-year grace period for the switch to a management-company arrangement, and thus a grace period also regardng revenue sharing.
