The Macau government is coming under increasing pressure to announce a delay to the retendering of its casino concessions, as the clock ticks for the city’s six operators with no visibility over the process.
The current concessions are set to expire in June next year. The government has promised a public consultation on any proposed amendments to the city’s gaming laws, which it said it planned to carry out in the second half of 2021.
With the end of the third quarter in sight there has been no word on any changes and no public consultation.
The operators have publicly urged the government to consider an extension of the current concessions for as long as three years to allow adequate time for the process, with the focus having been firmly on controlling the pandemic since early 2020.
“I don’t think the government is in a rush to renew the licences because they want to do things right.”
Sands China President Wilfred Wong has said the timetable for beginning the process is very tight and he doesn’t expect to see any movement until after Legislative Council elections on Sept. 12. He also added the government has not been in discussions with the operators.
“I don’t think the government is in a rush to renew the licences because they want to do things right,” he said on a recent conference call. “There are many legal issues they have to attend to, such as the concession and sub-concession issue, and for this they can only go to the Legislative Assembly when the new assembly is in place.”
Melco Resorts & Entertainment CEO Lawrence Wong also concurred that there is likely to be an extension. However, he also doesn’t foresee there being any major surprises to come out of the process due to the importance of the gaming industry to Macau. Analysts were asking in light of the recent regulatory crackdowns in China, where Beijing appears to be willing to crack down on some of its biggest companies, despite the economic consequences.
Still, a group of Macau legislators have suggested that the Special Administrative Region’s gaming law may not be compatible with China’s new security laws.
The Legislative Assembly Follow-up Committee in charge of Land and Public Concessions presented its final report in August.
“The entry into force, on March 1st of 2021, of the proposal to revise the penal code of the People’s Republic of China (…) the control of money outflows and the fight against organising the participation in gaming activities outside the country, is of great alarm to the gaming sector of Southeast Asia and the whole world,” notes the report, indicating that the rules “will make it difficult for VIP rooms to continue their operating methods.”
The committee also made suggestions to further oversee the gaming sector, in particular with a review of electronic gaming machine regulations and the overall number of machines allowed.
It also suggested that the government “reinforce the management of the system and how gaming is operated”, including a push for law revisions “regarding the operating model, social responsibility and proportion of activities.”
In particular the lawmakers said they would like to see concrete measures put into the law that would ensure the operators give priority to small-and-medium-size businesses to support young entrepreneurs and Made in Macau companies.
Like the operators, the legislators also urged the government to clarify its timelines for the process and also suggested an extension would be the best option. They would like to see another study into the development of gaming in Macau to ensure it retains its competitiveness.
Analysts and industry observers have commented that all of the current operators are likely to retain their licenses in the re-tendering process, but say the government will likely attach strings, such as a greater “encouragement” to invest in the Greater Bay Area and in non-gaming amenities.
Recovery lags as pandemic drags on
Macau’s labour bureau says some Macau operators continue to express confidence over substantial pent-up demand, however while revenue in Las Vegas powers ahead, the world’s biggest gambling hub is slow to get back on its feet.
During analyst conference calls to discuss recently released 2Q21 results, executives expressed optimism about long-term prospects for the market. However, recovery from the crisis is dragging due to Macau’s zero tolerance rates for Covid and continuing low vaccination rates.
Most of the operators to have reported so far remained in the black at the EBITDA level thanks to cost cutting and operational efficiencies, but the top-line growth isn’t there and analysts continue to trim their forecasts for this year and next.
Locals hold 90% of top jobs
Macau’s labour bureau says some 90 percent of employees at Macau’s six gaming concessionaires and sub-concessionaires are local. The figure is a slight rise from the 89 percent announced by Macau’s finance secretary earlier this year and is above the government’s target of 85 percent local employment in higher-level positions. In total the six concessionaires employ more than 108,000 employees, 77 percent of whom are local. Authorities say that they will continue to require companies to give priority to hiring locals. Over the course of the pandemic, Macau has pressured gaming companies to retain their staff, while encouraging the “acceleration of the exit mechanism for non-resident workers.”
