Gaming Association Says Macau Should Extended Licenses Ahead of 2022 Deadline
Posted on: August 31, 2020, 10:51h.
Last updated on: August 31, 2020, 12:42h.
The General Association of Administrators and Promoters, a trade group for Macau’s gaming sector, is pushing the special administrative region’s (SAR) government to extend operating permits for the six concessionaires in advance of the 2022 expiration deadline.
Licenses for Las Vegas Sands, MGM Resorts International, and Wynn Resorts and the three Asia-based concessionaires expire in mid-2022. Because of the coronavirus pandemic, renewal talks haven’t started this year as expected before 2020.
At a recent press conference at the University of Macau, Lam Kai Kong, director of the General Association of Administrators and Promoters for the Macau Gaming Industry, said current concessions should be extended for an “appropriate time.” However, he didn’t elaborate on how long that time frame should be.
Under the SAR’s legal framework, authorities there have the power to extend current permits five years beyond the expiration, which would take operators into 2027. There’s talk Macau policymakers are considering that avenue because it will give them adequate time to observe the SAR’s post-pandemic recovery.
For now, Macau Chief Executive Ho Iat Seng’s government is keeping its cards close to its vest regarding license renewals.
While analysts aren’t forecasting any of the six concessionaires will lose licenses, it is expected that the government won’t rubber-stamp approvals and that new demands will be made of operators. Those requests are likely to boil down to non-gaming diversification efforts, including more room supply and expanded dining, entertainment, and business amenities. Some operators already have related plans in the works in bids to smooth licensing renewal.
However, the ratings agency said the government is likely to make changes to existing operating accords. Earlier this year, JPMorgan Securities said it’s possible the permit evaluation process will be extended a year or so past the 2022 deadline.
With a direct tax rate of 35 percent, which climbs to an effective rate of 39 percent when factoring in fees and levies, Macau has some of the world’s largest gaming excises. But that’s the cost of doing business in the world’s biggest casino center.
While there aren’t plans to reduce those percentages, politician Leong Sun Iok is pitching an idea whereby the government would conserve some of the collected revenue to help operators in another crisis. Likewise, Leong also said the government should make it a priority that operators have adequate cash reserves to make it through hard times.
As just one example, Las Vegas Sands is widely praised by analysts for having the balance sheet to survive 18 months or more in a zero-revenue climate, while proceeding with Macau and Singapore enhancements.
News of the push to extend the tender renewal comes a day before August gross gaming revenue (GGR) figures will be released. Analysts are expecting another decline of 90 percent or more because travel controls were relaxed late in the month. The benefit of that liberalization won’t have a material impact until September.
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