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Macau may end casino sub-concessions, directly monitor ops

Sep 14, 2021 Newsdesk Latest News, Macau, Top of the deck  


Macau may end casino sub-concessions, directly monitor ops

The Macau government seeks, under proposed changes to the city’s gaming law framework, to end the system of “sub-concessions” that enabled three extra Macau licensees to be created from what had been envisaged as a three-concession system at the advent of market liberalisation at the start of the century.

There are also plans for government-appointed “delegates” to oversee how gaming operators fulfil their concession duties. The moves are mentioned in a document outlining a public consultation on the future of the industry, including the revision of the city’s gaming law.

The consultation period is from Wednesday (September 15) until October 29.

In a Tuesday media briefing on the consultation process, Macau’s Secretary for Economy and Finance, Lei Wai Nong, said that the government would like the Macau public to give their views on the maximum number of gaming concessions that should be allowed in the city, though he noted the public should be realistic in thinking about an upper cap on numbers.

The city’s existing six gaming concessions are due to expire in June 2022, unless the authorities grant a form of limited extension as permitted under current Macau gaming law. Such extension can be in increments, up to a maximum of five years from the original 20-year term. At Tuesday’s media briefing, Mr Lei declined to comment on whether the Macau government would seek to extend the current permits.

The government has said Macau’s gaming law needs to be updated as a linked issue to a fresh public tender process for Macau gaming rights.

“We don’t want to encourage any more sub-concession arrangements, because we want to ensure stability in our [gaming] concession system…they… should not expand endlessly,” said Mr Lei.

He wanted the public’s opinions on what should be a “reasonable” scale for the city’s gaming sector, so that the sector could remain “competitive”, and the city supported with a “steady” stream of taxation income.

Although the number of concessions was not mentioned in the consultation document, brokerage Sanford C. Bernstein Ltd said in a Tuesday note that it believed “it was clear” there would be at least “six” concessions, namely the current operators. “The chances of additional concessions are low as the government repeated the mantra of sustainable development,” added the institution.

Three of the current six operators in the market – namely Sands China Ltd, MGM China Holdings Ltd, and Melco Resorts and Entertainment Ltd – were allowed into the market via a piece of legal improvisation. They actually hold their gaming rights via sub-concessions spun off from the three original concessionaires that had been selected via a 2002 public tender. The three original concessions under the 2002 process were the locally-incorporated units of Galaxy Entertainment Group Ltd, SJM Holdings Ltd, and Wynn Macau Ltd.

In the consultation text, the government also proposes revising the length of future gaming concessions, although no time period was specified. The government also mentioned that any future provision for temporary extension of gaming concession terms, should be “in proportion” to whatever was the length of the new concession period.

Government delegates

The government has also proposed to appoint “delegates” to Macau’s gaming concessions, so that it can have a “bigger monitoring” capacity on the operation of the gaming firms. A delegate system is already used in Macau to monitor other forms of public concession.

GGRAsia asked Mr Lei at the Tuesday briefing how that proposal might operate in practice. The official said: “We want to reinforce the monitoring on the gaming companies. I want to stress that our regulations need to be updated to ensure that the development of the gaming industry will be sustainable, and healthy.”

The government said in the consultation document published on Tuesday, that it “has the responsibility to protect the interests and welfare of our public; while the gaming concessionaires are seeking to maximise their own profit… it is notable that these companies’ rights to operate gaming businesses stems from the Macau Special Administrative Region government’s grants of concessions.”

“It is proposed that… government delegates will be sent [to the gaming concessionaires] to enable the direct monitoring of the gaming concessionaires, so that the MSAR government would have bigger monitoring capacity on the daily operation of the gaming companies,” the consultation document stated.

Other government suggestions featured in the document put up for public consultation include: a proposal that dividend distribution by the city’s casino operators should require prior approval from the government; and the need to increase the minimum share capital requirement for any local casino concessionaire from the existing MOP200 million (US$25 million) threshold.

Macau officials were asked at Tuesday’s briefing whether the government would consider a more expansive form of online gaming, i.e., beyond the very limited version permitted under the city’s sports-betting concession issued to Macau SLOT Co Ltd. Mr Lei said any such idea required “cautious consideration”.

The official remarked on the online gaming topic: “As a leisure destination, we have our hotels, retail, and food and beverage businesses… these are all physical activities that are very important for our economy and employment.” Mr Lei added that the government would not only look at “short-term gains” derived from any new gaming formats.

In June, Macau SLOT had its concession renewed for three years, but on a non-exclusive basis. Wang Changbin, director of the Centre for Gaming and Tourism Studies at Macao Polytechnic Institute, and other commentators, said the non-exclusivity might open the possibility of Macau casinos running sports betting via their properties.


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