Macau Casino Concession Terms on 10-Year Contracts to Be Revealed

Posted on: December 14, 2022, 12:02h. 

Last updated on: December 14, 2022, 01:19h.

The Macau casino concession terms that the six gaming operators will need to uphold are expected to be revealed this Saturday, December 17.

Macau casino license China COVID-19 coronavirus
The sun shines on a quiet Macau in September 2022 as a COVID-19 outbreak forces most residents to stay home. Macau’s six casinos are ready for a comeback, as China begins easing its pandemic policies, including “zero-COVID.” (Image: Getty)

Macau’s Special Administrative Region (SAR) government is expected to sign the new 10-year operating agreements on Friday. The contracts will allow Las Vegas Sands, Galaxy Entertainment, Melco Resorts, Wynn Resorts, MGM Resorts, and SJM Resorts to continue running their casinos and integrated resorts in Macau and on the Cotai Strip through at least Dec. 31, 2033.

The local government has organized a press conference for this Saturday where details on each concession’s terms are expected to be disclosed.

Macau is one of two SARs belonging to the People’s Republic of China. As a semi-autonomous area under China’s “one country, two systems” policy principle, Macau allows commercial gambling to operate inside its borders. It’s the only place in China where casino gambling is allowed.

Capital Spend Paramount

Macau has managed to keep its regulatory negotiations rather tight-lipped regarding the conditions it will impose on its six casino companies in order for them to maintain their coveted concessions.

Initial reports suggested that the six companies will need to invest around MOP100 billion (US$12.5 billion). But in recent weeks, rumors have surfaced that Macau has upped the ante to around MOP160 billion (US$20 billion).

That would equate to between $2 billion to $3.3 billion per licensee. Macau is expected to levy the investment criteria in a graduated fashion based on each operator’s current market share. Sands and Galaxy maintain the largest market share and are expected to be required to invest the most capital in exchange for their new 10-year licenses.

Another anticipated condition of the gaming terms is that each operator increases its local ownership of the license. Under Macau’s expiring gaming industry environment, at least 10% of each concession must be owned/controlled by a local managing director. Under the enclave’s 2023-2033 gaming environment, that control must increase to a minimum of 15%.

Wynn Macau, Wynn Resorts’ Chinese subsidiary, announced in late November that it’s injecting almost $600 million into the business by issuing additional shares. COO, Executive Director and Vice Chair Linda Chen’s ownership position will now be 15%.

Travel Conditions Easing

More than three years since COVID-19 emerged in Asia, China is finally relaxing its stern coronavirus policies and doing away with “zero-COVID.” The world’s most populated country and second-largest economy moving toward a resumption of normal life should benefit the entire world, as supply chains will be restored and critical manufacturing will resume.

For Macau casinos, the end of “zero-COVID” will return much-needed mainland and foreign visitors to the casino hub. Gaming remains greatly subdued in what was the world’s richest gaming market before the coronavirus.

The six casino operators have won approximately MOP38.7 billion(US$4.8 billion) on their gaming floors this year through November. That’s almost $29.9 billion below the $33.6 billion that the six companies won during the 11 months in pre-pandemic 2019.