Macau Casino Stocks Surge With News On License Renewals

Macau’s next regulatory regime will include six concessions, or licenses, with the tenure of those licenses halved from 20 years to a decade, the gambling hub’s Executive Council said Friday.

The long-awaited clarification on forthcoming reforms caused shares in LVS, MGM Resorts, and Wynn Resorts to surge in pre-market trading. The draft law paves the way for Macau’s six operators to have their licenses renewed beyond their expiration in June, removing a great deal of uncertainty, particularly for the US companies.

The proposal, which must be approved by the legislature, also requires operators to increase minimum share capital to 5 billion patacas ($623.67 million) from $200 million patacas ($25 million). Meanwhile, an operator’s managing director, who must be a permanent Macau resident, will have to hold 15 percent of share capital, up from 10 percent.

There is no plan to raise casino taxes, which will remain at 35 percent of gross gaming revenue.

Fears Unfounded

In September, Macau casino stocks plummeted on the news that the special administrative region’s government would hold an in-depth review into its gaming law.

Investors feared a Beijing-backed regulatory crackdown. But few of their worst fears have been realized.

Beijing has become increasingly dissatisfied with Macau’s reliance on its gambling industry, which it believes encourages capital flight from mainland China.

Extensions Possible

Speaking at a press conference Friday André Cheong, spokesperson of the Executive Council and Secretary for Administration and Justice, said he hoped the draft law could be implemented as soon as possible. However, if existing operators needed an extension to their licenses beyond June, then that would be granted.

“All the works regarding the gaming law revision and preparation for the new public tender will be carried out in an orderly manner. If the current licenses have to be extended, it will only last for a short time period,” he said.

While the six concessions appear to be tailor-made for those existing operators, they will still have to bid for them, and Cheong said other companies are welcome to join the public tender.