The announced closure of Macau’s 11 satellite casinos by year-end was a “negative surprise”, and the transition will in likelihood be more complex for SJM Holdings Ltd than the other concessionaires that have satellite partners, said various brokerages.
The existing 11 satellites operate under the 10-year gaming concessions that began in January 2023. Nine of the venues are lined to SJM Holdings’ Macau licence; one to Galaxy Entertainment Ltd’s gaming permit; and one to Melco Resorts & Entertainment Ltd’s Macau rights.
All three affected concessionaires issued statements on Monday afternoon regarding the closure of their respective satellite casinos by year-end.
Only Ponte 16 and L’Arc Macau – satellites under SJM Holdings – are expected to continue operations beyond 2025. To that end, the Macau concessionaire announced plans to acquire the respective properties where those two casinos are located, meaning they would no longer be classified as “satellite operations”. No terms or binding agreements have been announced so far, and the move still requires approval from the Macau government.
JP Morgan Securities (Asia Pacific) Ltd said in a Tuesday memo that in its view the impact from the cessation of satellite operations would be “negligible” for Galaxy Entertainment and Melco Resorts.
That was because “their properties under satellite arrangement – including Melco Resorts’ slot parlours – contributed only 0 percent [and] 1 percent to 2 percent” of Galaxy Entertainment and Melco Resorts’ trailing 12 months earnings before interest, taxation, depreciation, and amortisation (EBITDA), it added.
The situation however “is (much) more complex” for SJM Holdings, stated the brokerage.
“Satellite casinos accounted for 4 percent of SJM’s trailing 12 months EBITDA, which itself is manageable.” But the “reassignment” of [circa] 440 tables from the casino firm’s portion of Macau satellite business would “bring likely thousands of staff under SJM’s direct payroll,” observed JP Morgan.
“This could even result in losses from wage burdens unless SJM successfully gains meaningful market share with these additional tables,” added the institution.
Analysts at brokerage CLSA Ltd said in a Tuesday report that they were “surprised that discontinued operations included profitable casinos” in the Macau market, such as Casino Kam Pek Paradise.
“We expect SJM’s plans to relocate tables from these satellite casinos to [the] Grand Lisboa Palace [resort] will accelerate the ramp-up; but it will take time,” noted CLSA.
Reassigning tables, workers
The Macau government has calculated “5,600” staff – all local residents – would be affected by the closure of the city’s satellite operations, of which “4,800” were under the respective concessionaires, and 800 employed by the satellite-venue owners.
A further 400 non-resident workers were employed in satellites, according to government officials.
Citigroup said in a Monday memo that it believed staff related to SJM’s seven satellites that are due to close this year “represent the lion’s share” of local staff at satellite venues.
“The reassignment of the gaming-related staff to SJM’s self-operated casinos – and the potential absorption of staff hired by property owners – could lead to the resurrection of the ‘excess costs from satellites’ that SJM shouldered from second-quarter 2023 to fourth-quarter 2024, starting as early as first-quarter 2026,” said the institution.
The banking institution stated: “We are currently unsure if SJM is acquiring the entire properties of Casino L’Arc and Casino Ponte 16 or the gaming areas only.”
It added: “As of end-first-quarter 2025, SJM had a net debt of HKD23.5 billion [US$2.99 billion] – including its HKD2 billion shareholder loan –, implying an above-industry-average circa six times net debt-to-EBITDA.”
According to Citi, all Macau residents who are employed as SJM employees at the satellite casinos scheduled for closure “will retain their employment and be reassigned to similar gaming-related roles at other SJM casinos, based on operational needs”.
It added: “Non-SJM employees who are local residents will also be invited to apply for suitable positions at SJM.”
The institution observed: “It is premature to gauge the impact from the potential acquisition of Casino L’Arc and Casino Ponte 16 without knowing the details of the transaction.”
“On the other hand, although the tables from the shuttering satellites are retained, the reallocation of these tables to its [SJM’s] self-operated casinos – expected to be mainly Grand Lisboa Palace and Grand Lisboa – does not necessarily equate to retaining market share, there is a possibility that more tables could lead to a dilution in table utilisation,” it added.
