Macau Concessionaires Could Land Modest License Extensions of Up to 12 Months

Permits in Macau — the world’s largest casino center — expire in June 2022. With little progress being made on re-tendering, local authorities might simply extend the licenses for six to 12 months to buy some added time.

Analysts at JPMorgan believe officials in the special administrative region (SAR) could employ the stopgap measure. The 45-day public consultation period on Macau gaming laws draws to a close on Friday.

The next milestone will be the summary report on public consultation, which the government is required to publish before mid-March (180 days from public consultation),” said JPMorgan analysts DS Kim, Amanda Cheng and Livy Lyu in a note to clients.

With June 2022 not that far off, and with little progress made this year on renewal, Macau authorities may have no choice but to consider a modest extension under current gaming laws. They would then use 2022 to build momentum for re-tendering and renewal.

Some Signs of Hope, But Schedule Still Tight

Entering this year, it was widely believed Macau’s Gaming Inspection and Coordination Bureau (DICJ) would make progress on renewing the six concessionaires’ gaming permits. But that effort was stymied by a slow recovery, still ongoing recovery from the coronavirus pandemic, and more recently, the specter of tighter regulatory controls.

With about eight months until expiration and with little progress made this year, Macau policymakers may have no choice but to turn to quick fixes. Those could include public tenders or extending operating rights under policies, according to some analysts. As for what comes after the summary report on the public consultation, that process could be time-consuming.

“This will be followed by submission of the final draft on the revised gaming law which, once approved by the Legislative Assembly, will set the basis for concession re-tendering. A public bidding process should then follow, from which the government will pick the next concessionaires,” adds JPMorgan.

Perspective Concessionaires

Amid the commotion about Macau authorities potentially tightening regulatory screws on operators, there’s been some talk in the investment community that the industry there could be reshaped. However, JPMorgan is among the research firms that view those concerns as exaggerated.

While there was no clear evidence, we do think the government’s ‘tone’ was somewhat reasonable, in turn alleviating concerns on the worst-case scenarios to some extent,” added the analysts.

Three US-based operators — Las Vegas Sands, MGM Resorts International, and Wynn Resorts — do business in Macau, and each appears comfortable that its permits will be renewed.