• About Us
  • The Team
  • Advertise with Us

The latest news on the gaming industry in Asia

() () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () () ()
  • Home
  • Macau
  • Philippines
  • Singapore
  • Japan
  • Rest of Asia
  • World
  • Features
  • Industry Talk
  • Trends & Tech
  • follow
    • Facebook
    • Twitter
    • RSS Feed
    • LinkedIn

Future of Macau casino licences unclear in 2019, says broker

Dec 19, 2018 Newsdesk Latest News, Macau, Top of the deck  


Future of Macau casino licences unclear in 2019, says broker

The questions around the refreshment of gaming licences for the current six Macau casino operators will not be resolved next year, according to Morgan Stanley.

The stockbroking arm of the investment bank issued a note on Monday saying its view contrasts with the broadly held consensus in the market that the riddle of Macau’s gaming licence regime will be settled one way or another in 2019, causing fluctuations in the share prices of the city’s gaming operators.

Morgan Stanley expects no decision on licence refreshment until after the Macau SAR gets a new Chief Executive, next December. The decision to extend the first two licences up for renewal is likely in the first quarter of 2020, and a decision on the other four licences is likely in the following two years.

The concessions of the six current Macau operators expire on various dates in either 2020 or 2022, with the respective licences of SJM Holdings Ltd and MGM China Holdings Ltd set to expire in March 2020.

“We think that once this uncertainty is removed, it will have a much bigger and more positive impact than any potential for higher taxes or new competition,” the note says.

Macau’s gaming law states that the licences of the existing holders can be extended for a maximum of up to five years from their original expiry dates. But once a gaming concession contract expires, any new concession would have to be granted via a public tender. In that sense, say gaming lawyers familiar with the matter, there is no such thing in the Macau context as a “concession renewal”

In the view of the wider market, Morgan Stanley analysts Praveen Choudhary, Jeremy An and Thomas Allen said the effect of a decision on licence renewal next year may be disruptive for the prices of Macau gaming stocks. But even the worst outcome for the licensees may have only a minimal effect, they added.

The stockbroker imagines two scenarios, both of which it considers possible but unlikely. In one scenario, the effect is monetary. “We think it is likely that the [Macau] government could impose either a one-time fee or an ongoing revenue tax at a higher rate than the current 39 percent,” the note says.

In the other, more severe, scenario, the existence of gaming companies is threatened. “It may mean either partial loss of licence or competition from a new entrant.”

Morgan Stanley said its research suggests that disruption would be minimal. “We did a comprehensive quantitative analysis on these two risks in our Global Gaming Disruption Report and concluded that, unlike the consensus view that licence renewal will have a disruptive impact, we think the impact is likely to be controllable and still see upside potential for Macau gaming stocks in 2020-22 from current levels even if the most disruptive scenario occurs,” it said.

Macau’s Chief Executive Fernando Chui Sai On provided no guidance in the run up to the licence renewals in the Policy Address for 2019.

In the weeks since, there have been a number of interpretations offered. A 28-page analysis from brokerage Sanford C. Bernstein Ltd said it would be “virtually impossible to operate a casino without the cooperation of the real estate owner (i.e., the current concessionaire)”.

Brokerage Telsey Advisory Group LLC suggested it was concerned by the ambiguous future of the licences. “In last year’s policy address, Mr Chui had suggested that mid-2018 would be an appropriate time to address this issue,” a company research note said.

It added: “Last year the Macau government commissioned two studies on the gaming industry concession renewals, both of which were expected to be completed by the third quarter of 2018. We are obviously not in the third quarter anymore, and we are well past ‘mid-2018′. Given this, and considering the current geopolitical tensions between the United States and China, we are watching this situation closely.”


  • tweet
Related articles
  • NUSTAR complex in Cebu slated to open 2022: UHRI
    NUSTAR complex in Cebu slated to open...

    Apr 16, 2021  

  • Macau casino 1Q EBITDA softer sequentially: MS
    Macau casino 1Q EBITDA softer...

    Apr 12, 2021  

More news
  • Macau VIP GGR up 20pct sequentially in 1Q: govt
    Macau VIP GGR up 20pct...

    Apr 16, 2021  

  • Labour Day hols hotels to be 40-50pct full: Macau govt
    Labour Day hols hotels to be 40-50pct...

    Apr 16, 2021  


Latest News

Macau VIP GGR up 20pct sequentially in 1Q: govt

Macau VIP GGR up 20pct sequentially in 1Q: govt

Apr 16, 2021  

Macau’s VIP gross gaming revenue (GGR) in the first quarter of 2021 reached nearly MOP9.13 billion (US$1.14 billion), up 19.7 percent sequentially, according to data released on Friday by the...
Read More
NUSTAR complex in Cebu slated to open 2022: UHRI

NUSTAR complex in Cebu slated to open 2022: UHRI

Apr 16, 2021  

Labour Day hols hotels to be 40-50pct full: Macau govt

Labour Day hols hotels to be 40-50pct full: Macau govt

Apr 16, 2021  

Macau may tie GBA backing to gaming tender: law experts

Macau may tie GBA backing to gaming tender: law experts

Apr 16, 2021  

Sign up to our FREE Newsletter

UB8V5.qr.16(Click here for more)

Pick of the Day


US$1.15 billion

Tax revenue collected by the Macau government from the city’s gaming industry in the first three months of 2021



Most Popular

  • Macau 2021 GGR could be half of pre- Covid-19 levels: FitchMacau 2021 GGR could be half of pre- Covid-19 levels: Fitch April 15, 2021
  • Macau 1Q VIP GGR bad at 20pct pre pandemic: JP MorganMacau 1Q VIP GGR bad at 20pct pre pandemic: JP Morgan April 14, 2021
  • NUSTAR complex in Cebu slated to open 2022: UHRINUSTAR complex in Cebu slated to open 2022: UHRI April 16, 2021
  • Sands China says no links to online gaming siteSands China says no links to online gaming site April 15, 2021
  • Bloomberry Quezon project in 2023, focus on preserving cashBloomberry Quezon project in 2023, focus on preserving cash April 16, 2021
Copyright 2014-2021 TEAM Publishing and Consultancy Ltd / All rights reserved
  • Code of Ethics
  • Privacy Policy
  • Useful Links
  • Contact Us