GGRAsia – Macau ops may get new gaming rights by year-end: Moody’s

Macau ops may get new gaming rights by year-end: Moody’s

Jun 23, 2022 Newsdesk Latest News, Macau, Top of the deck

Moody’s Investors Service Inc said in a Wednesday note it believed Macau’s six current gaming operators “will receive new direct licences by the end of this year”.

It added: “Failure to renew any existing concessions will pose substantial risk to Macau’s government finances because of the significant amount of taxes and employment the industry generates.”

The current licences are due to expire on June 26, though the government was due on Wednesday to sign contracts with the operators – according to media reports – for a short extension until December 31, as Macau prepares for a new public tender.

An article in the city’s revised gaming law – a statute passed on Tuesday – sets the tax payable on casino gross gaming (GGR) at 40 percent, although the law gives an incumbent Macau chief executive the discretion to reduce such tax burden by up to five percentage points for “reasons of public interest”, “namely” attracting “customers from foreign countries”.

Moody’s said it did not expect Macau’s revised gaming law “to bring significant changes to the gaming industry in terms of competitive landscape and regulatory regime”.

The ratings institution said the revised law should have a “largely manageable credit impact on Macau’s gaming operators”

But it warned, referring to Macau’s latest Covid-19 outbreak announced on Sunday, that accompanying restrictions on inbound travel, including for tourism from mainland China, “again highlight the risks of a slow and uneven recovery in gross gaming revenue (GGR), which is credit negative to all operators in the gaming sector in Macau”. It was the city’s first outbreak since October.

The revised law was published in Macau’s Official Gazette on Wednesday.

It comes into force on Thursday (June 23), although certain provisions would only come into effect after new concessions are awarded following an expected new public tender. That is according to guidance to the media from Chan Chak Mo, a veteran local legislator who headed a Legislative Assembly committee that helped steer the passage of the bill.

The provisions of the final bill were “largely in line with what was outlined in the initial draft unveiled in January,” said Moody’s.

The law allows a maximum of six concessions and a concession period of 10 years, extendable by an additional three years in exceptional cases.

Moody’s stated in its Wednesday memo that it expected Macau’s 2022 mass-market gaming revenue would be “around” 40 percent of 2019 levels, i.e., before the onset of the pandemic, “improving to 80 percent” in 2023, with “full recovery in 2024”.

The institution added: “We also do not expect any significant recovery in VIP revenue,” because of what Moody’s termed a “regulatory crackdown on junkets”.