An advisor to the Macau government says the question of how many gaming concessions there might be in the territory after the expiry of the current six in stages from 2020 to 2022 “might still be under consideration”.
Francis Tam Pak Yuen, Macau’s Secretary for Economy and Finance, was quoted by the Chinese-language press as saying during a visit to Beijing in March that there “should be no increase” in the number of gaming concessionaires post-renewal.
But David Green, an Australian lawyer and former gaming regulator, who has advised the Macau government on gaming regulatory policy since 2000, told a conference session at Global Gaming Expo (G2E) Asia 2014 that this might not be an accurate reflection of what Mr Tam said.
“I don’t believe that’s what he actually said. I think the matter might still be under consideration,” stated Mr Green, principal of Newpage Consulting Ltd. But he added it would be hard to choose anyone else for a concession without going to competitive tender.
He explained: “…it would be extremely difficult to grant additional concessions without undergoing a full tender process. The reason for that is that there are so many people who have an interest in the industry who may also have the affiliations and connections to argue that they in fact should be granted concessions, that it would become impossible to make a decision – or certainly one that would be acceptable to all interested parties.”
Mr Green added that the attraction of the current arrangement was that it included “a group of very strong operators internationally – the strongest operators in their particular class I’m sure”.
“There may be people [casino operators] with aspirations to be here, but not who should be here,” he stated.
“It [concession and sub-concession renewal] will probably not be much more than a routine exercise,” Mr Green suggested.
But he added it “did bear speculating” as to under what financial and contractual terms any renewals of existing permissions might take place. The capital commitment for the next generation of Cotai casinos alone, amounts to more than US$20 billion.
“Each of these companies have already invested multiples of their initial commitment. And it doesn’t seem to make a lot of sense for a government that already has very significant fiscal reserves – to be asking [the operators/concessionaires] to invest further – certainly not in Macau, because there is nowhere [no space] to invest in Macau, unless you start a process of urban renewal. So maybe the answer is they [concessionaires] should invest in Hengqin [Island],” Mr Green suggested.
The lawyer was originally part of the Arthur Andersen consulting team hired by the Macau government to advise on the liberalisation of the Macau casino industry.
Mr Green said any renewal of current permissions would involve the ending of the three sub-concessions that stem from the original three concessions. He said such sub-concessions were defacto concessions, but as things stand are private contracts with no provisions for cross-default. Though he added that SJM Holdings Ltd might remain on a different contract timeline to the others for historical reasons.
Conference advisor Ben Lee, managing partner at IGamiX Management & Consulting Ltd, raised the issue of a possibility of a seventh Macau concession – a “people’s concession” managed on behalf of Macau permanent residents. Populist candidates floated such an idea during the direct election last September for seats in the Legislative Assembly.
Mr Green suggested that might be difficult to execute.
“The government doesn’t need a concession. The government owns the [gaming] rights. So the government could basically act independently if it wishes to do so,” explained Mr Green.
But he added: “I think the whole concept of whether there should be a [commercially-active] Temasek-like sovereign wealth fund [such as Singapore’s] on behalf of the people of Macau is a really interesting concept… But I can see all sorts of reasons why that would be extremely difficult [in the casino context]. Governments don’t want to operate casinos. Generally they are not very good at it.”
Sep 18, 2020The Singapore Tourism Board (STB) has announced several partnerships to support local business and boost the city’s tourism industry, amid the coronavirus pandemic. The tourism board said in a...
”Many investors cite Golden Week as a catalyst to significant, sustainable visitation increases and a showcase for profitability for many casinos [in Macau]... However… we are concerned recovery estimates may again be pushed back”
Analyst at Roth Capital Partners