SJM CEO seeks govt breaks for Macau ops amid virus woes
The chief executive of Macau casino operator SJM Holdings Ltd says the firm has asked the Macau government to consider giving the local industry some financial breaks amid uncertainties over the coronavirus alert.
Ambrose So Shu Fai (pictured in file photo), who is also vice-chairman of SJM Holdings, suggested a reduction in premiums payable to the local government on casino tables and gaming machines, and certain rebates on undefined “gaming-related taxation”. In the Macau context, “gaming tax” is usually a reference to taxation on gross gaming revenue (GGR). This is currently levied at 35 percent, although other charges take the effective local rate on GGR up to 39 percent.
SJM Holdings’ CEO made the suggestion in an interview with Chinese-language media outlet the Hong Kong Economic Journal.
Brokerage Nomura had mentioned in a Tuesday note that Macau’s six licensees had been asked to “eat” their “operating costs, particularly labour,” due to the local authorities’ request that the sector avoid cutting staff or wages during China’s coronavirus crisis. The alert saw a local escalation in late January and led to a 15-day closure – up to Wednesday – of the city’s casino resorts. Even after partial resumption of business on Thursday, analysts were not expecting a fast ramping up of trade, due to factors including various travel restrictions imposed in China and beyond to try to contain the virus’ spread.
Under the contracts that the six operators have respectively with the Macau government, each must pay every year a total MOP300,000 (about US$37,500) premium per VIP table; MOP150,000 per mass-market table; and MOP1,000 per slot machine.
Currently, there is an aggregate of 6,754 gaming tables in Macau casinos, according to Secretary of Economy and Finance, Lei Wai Nong, speaking in a Monday government press briefing. No breakdown was given for the tally of VIP tables versus the mass-market ones.
As of the third quarter in 2019, SJM Holdings operated an average of 286 VIP gaming tables and 1,503 mass-market gaming tables, according to its unaudited third-quarter earnings report filed in October with the Hong Kong Stock Exchange.
Hong Kong media
SJM Holdings’ Mr So told the Hong Kong newspaper that he believed the Macau administration would understand the “operational difficulties” of the gaming sector amid the current impact on business of the novel coronavirus, Covid-19.
The CEO said whether there were any improvement in the city’s gaming business in March and April might depend on the effectiveness of virus control efforts in mainland China, and whether Hong Kong-Macau ferry services could restart. They were suspended earlier this month after the Hong Kong government closed ferry terminals there as part of its own virus containment efforts.
GGRAsia approached Macau’s casino regulator, the Gaming Inspection and Coordination Bureau, asking whether gaming operators had made any formal requests for financial breaks of the sort described by Mr So, and if so, whether they might be suitable for consideration by the local government. We had not received a reply by the time this story went online.
Other Macau gaming operators had admitted recently that the closure order had had a significant negative impact on their respective businesses. During a conference call with investment analysts last week, management at MGM Resorts International said the shuttering of the group’s two Macau casinos was costing it US$1.5 million a day. The “majority” of that was staff pay, it said.
Rival casino operator Wynn Resorts Ltd said on February 6 that the temporary closure of its two casinos in Macau was costing the group between US$2.4 million to US$2.6 million a day.
Mr So noted in his comments to the Hong Kong media outlet that only parts of the gaming venues at SJM Holdings’ Hotel Lisboa and Grand Lisboa – properties located in downtown Macau peninsula – were being reopened on Thursday. The resumption of business at those venues accounted for “50 percent” of the gaming tables at both properties, the executive said.
A number of casinos run under the licence of SJM Holdings requested not to reopen as of Thursday, according to the gaming regulator’s commentary on Wednesday. The properties were: the Jai Alai – Oceanus casino complex in downtown Macau; Casino Taipa, at the Regency Art Hotel; and so-called satellite operations run respectively at Casino Eastern at the Grand Lapa hotel on Macau peninsula; and the Casino Macau Jockey Club in Taipa, located in the Macau Roosevelt Hotel.
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