Macau Won’t Target US Operators, Fitch Analysts Say

Posted on: January 11, 2022, 09:34h. 

Last updated on: January 11, 2022, 01:34h.

Casino operators in Macau are waiting to see the final results of the city’s updated gambling laws. They’re likely a little anxious, but Fitch Rating analysts don’t believe they should be.

Wynn Macau
The Wynn Macau is one of six operators waiting for a new license in Macau. Fitch Ratings believes it and the other US-led companies in the city are safe. (Image: Wall Street Journal)

Macau’s government and gaming regulators are working on updated gambling laws, which are expected to be released in the coming months. There has been a lot of activity over the past two years in preparation for this upgrade.

Late last year, concerns were raised when the first public draft was released. Subsequently, US casino operators, including Las Vegas Sands and Wynn Resorts, saw a slip. Their stocks dropped in light of some of the language included in the draft.

Since then, there has been a recovery in the companies’ positions. This is despite lingering concerns over whether China will use its influence to steer Macau’s regulations. Fitch Ratings issued an update yesterday, indicating that operators can relax.

US-led Gaming Companies in Macau Should be Safe

Fitch pointed out that the local operators tied to large US companies are listed in Hong Kong, which is a plus. They have also “tens of billions of US dollars” invested in the city. As a result, they don’t need to be concerned about being kicked out. It added that there is “no obvious evidence yet” that these will be treated differently from their locally-grown counterparts.

All Macau operators have been supportive of broader local policy goals. [The operators] have ensured employment through the pandemic despite meaningfully reduced revenue, and paid billions in US dollar-equivalent gaming taxes over the years,” Fitch analysts Colin Mansfield, Samuel Hu, and Connor Parks asserted.

The six casino operators in Macau are waiting on the issuance of new licenses. The current concessions expire this June, and the city recently indicated that it is on track to distribute the new concessions on time.

Fitch Keeps Eye on Macau Gaming Scene

When Macau published its draft of the upcoming gambling laws last year, Fitch responded quickly. At around six months before the new licenses were to be issued, and with no finalized laws in place, it assigned a “negative” to operators’ credit ratings.

That rating is still in place, but Fitch asserts that it’s only protocol. The absence of the updated status of the new laws and concessions is the main reason no change has been made. It explained that it will take a fresh look once Macau “clarifies the new concession regulatory environment, and there is greater certainty that an existing concessionaire has secured a new concession.”

Fitch pointed out that removing the negative rating from an operator is possible. However, it is only likely following the issuance of a new concession to the operator. It believes that Macau’s future operating environment cannot be predicted, but maintains that regulators will adopt a “pragmatic approach” because of their preference for stability.

Macau’s Slow Start 

Macau gaming isn’t gaining momentum in the new year. The city’s gross gaming revenue (GGR), according to analysts with Sanford C. Bernstein, lost 9% from the last 12 days of December. The average daily rate dropped to MOP266 million (US$33.1 million) this month.

Month-to-date GGR is also down compared to January 2019, losing 67%. However, it improved in January of last year, adding 3%. The average daily rate then was MOP259 million (US$32.2 million).

For this month, the figure was MOP2.4 billion (US298 million).