HomeNewsMacauExtension forecast for Macau re-tender

Extension forecast for Macau re-tender

-

For David Green, principal of Newpage Consulting, 2021 featured some watershed events for the industry, including the probes into Crown Resorts and the arrest of Alvin Chau.

It was a surprise to many that Crown Melbourne retained its casino licence, albeit with a special manager appointed by the government to oversee its journey towards suitability over the next two years. Crown is probably the largest gaming company ever to be found unsuitable.

The fact that it required a Royal Commission, rather than a regulator-initiated inquiry to arrive at that result will provide something of a wake-up call for gaming regulators across the globe.

The arrest of Alvin Chau was another key event. While he is entitled to the presumption of innocence, mainland authorities have periodically telegraphed their concern with the junket operations of the Suncity group, and their proxy betting activities in the Philippines. While Suncity has moved forward to integrate into casino operations in Vietnam, the Philippines and Russia, it has continued to operate the businesses which attracted official attention.

Mr. Chau and Suncity were also tainted by the Bergin Inquiry into Crown Sydney’s suitability to hold a casino licence. Closing down VIP rooms after the event may be a classic case of shutting the stable door after the horse has bolted.

The implications of the case against Mr. Chau and his associates in Macau are potentially far reaching, and represent an existential threat to the future conduct of junket businesses.

A worst case scenario would see the People’s Republic of China’s criminal law revision treat Macau in the same way as other cross-border destinations for Chinese gamblers, a position which will severely crimp the recovery of the gaming business in Macau post-Covid.

Another key event was the result in the Dore case, which found Wynn jointly liable for losses occasioned to third parties by the theft from Dore. The case highlights the fact that operators should not rely either solely or principally on the fact that a junket is licensed under AR 6/2002 when making a decision as to whether they ought to contract them to run VIP rooms in their casinos. Amendments to AR 6/2002 may be expected, but I doubt they will do much to shield casino concessionaires from such risks.

It may not matter too much; the era of the traditional junket operation may well have been flagged with Alvin Chau’s apprehension.

Looking ahead, Macau in 2022 will be a very different place. I think it unlikely that the concession re-tender will be undertaken during the year, more likely a 6-12 month concession extension, with a start to the process early in 2023.

The government may need to rethink its expectations for bids for the new concessions; the greenfield/blue sky opportunity offered in 2001 is nothing like the scenario that confronts potential bidders currently, or will likely be when the tender is opened.

Competition is unlikely to be the issue. Japan is still some way off getting its IR developments awarded, much less built and opened.

Other China-facing jurisdictions, such as Cambodia and Korea will probably see much of that business atrophy. Rather, it will be the structural change in the industry, away from junkets and more towards the lower volume mass and premium mass-market segments.

All is predicated on the absolute uncertainty of the future impact of Covid and its various strains and mutations.

It is not a cocktail which bodes well for the government if it is seeking shorter concession terms, more concessions, or substantial investment or front-end premiums for the grant of the new concessions.

About the Author

David Green
David Green
David Green is a principal at Newpage Consulting, experts in gambling regulation. The company advises in the three key areas of regulatory frameworks, market analysis, and taxation regimes.

MORE FROM THE AUTHOR

UPCOMING EVENTS