Macau Concession Renewal Could Extend Beyond 2022
Posted on: August 12, 2020, 09:57h.
Last updated on: August 12, 2020, 10:29h.
Gaming licenses for Macau’s six concessionaires will expire in mid-2022, and conversations about renewing the permits are expected to gain steam next year. But there’s a real possibility the process will be delayed.
Macau Chief Executive Ho Iat Seng said the priority is steadying the special administrative region’s (SAR) ailing economy, in a press conference held earlier today before he departed to Beijing for five days of meetings.
Our focus now is on cooperation regarding epidemic prevention and stabilizing the economy,” he said at the media briefing, adding that concession renewal isn’t on the agenda for his time in Beijing.
Ho said he’s waiting on local authorities to complete an extensive review of Macau’s gaming-dependent economy before commenting on renewing gaming permits.
Las Vegas Sands, MGM Resorts, and Wynn Resorts are the US-based companies operating in the world’s largest gaming center, combining to run nine integrated resorts there. Galaxy Entertainment, Melco Resorts & Entertainment, and SJM Holdings are the SAR’s other concessionaires.
In April, Macau Secretary for Economy and Finance Lei Wai Nong said there aren’t delays in terms of the government studying and updating gaming laws. But those comments didn’t address the 2022 license renewal process.
Owing to the coronavirus pandemic, some analysts and industry observers are saying the timeline for concession talks will be pushed out past 2022 to give Macau officials more time to analyze the SAR’s COVID-19 recovery trajectory. JPMorgan analysts previously said it wouldn’t be surprising to see the 2022 time frame pushed out a year or perhaps slightly longer.
Under Macau law, authorities can extend concessionaires’ current licenses for a maximum of five years, which would extend the process to June 2027. That would give lawmakers ample time to study the region’s post-pandemic rebound because the consensus among analysts is that gross gaming revenue (GGR) will rebound in earnest next year and approach 2019 levels in early 2022.
Some in the investment community believe trade tensions between the US and China present Macau licensing renewal risk for Las Vegas Sands and Wynn, and that President Trump’s heavy-handed approach toward China could factor into the equation.
Trump recently banned the Chinese messaging app WeChat, citing national security concerns. US gaming companies operating in Macau use that social media platform, which has 1.2 billion users, most of whom reside in mainland China, as a marketing tool to connect with gamblers.
The WeChat ban is prompting some experts to speculate US gaming companies operating in Macau could lose business to their Asia-based rivals. It’s the latest in a series of moves by Trump drawing the ire of Beijing.
William Evanina, director of the National Counterintelligence and Security Center, recently said data gathered by the US intelligence community makes it clear China wants Trump to lose his reelection bid this November, while Russia prefers a Trump victory.
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