Macau Likely Sticking with Six Casino Concessionaires
Posted on: September 16, 2022, 10:54h.
Last updated on: September 16, 2022, 03:09h.
Seven groups — the six established concessionaires and an entity tied to Genting Malaysia — have submitted bids for Macau gaming permits. Analysts expect the number awarded will be six, however.
The emerging consensus is that gaming regulators in the special administrative region (SAR) will unlikely drop one of the six incumbents in favor of Genting, indicating the Malaysian conglomerate is fighting an uphill battle in its quest to enter the largest Asia-Pacific casino hub.
Macau already has six of the best casino operators in the world, evidenced by their massive contributions to Macau over the past two decades,” wrote Citi analyst George Choi in a report to clients. “Genting Group has its own strengths, but we don’t think it offers any unique attributes that would persuade authorities to make a change.”
The established Macau operators are Galaxy Entertainment, Melco Resorts & Entertainment (NASDAQ: MLCO), MGM China, Sands China, SJM Holdings, and Wynn Macau. All of those companies submitted bids to renew their permits.
Some Macau Concessionaires Have Advantages
As with any other competition, some Macau operators have edges over their rivals, and those advantages are unlikely to go unnoticed by regulators.
For example, Galaxy and Sands China – a unit of Las Vegas Sands (NYSE: LVS) – aren’t just the two largest Macau operators. The bulk of their business is derived from mass and premium mass players. That’s a benefit, as the SAR’s VIP circuit may never return to normal following the demise of the junket industry.
“Following the decline of junkets, as well as Covid impacts, we believe the Macau government needs stable and healthy development of the mass-market gaming business more than ever,” added Choi. “The six incumbents appear best positioned to assist the government to achieve this goal with the least risk.”
Among the issues regulators are looking to address in the retendering process are concessionaires making more non-gaming investments. They are also looking at their plans for luring visitors to Macau from locations beyond mainland China. Owing to ties to geographically diverse parent companies, MGM China and Wynn Macau can check that latter box, as can Melco.
Where Genting Fits In
It’s not surprising Genting wants to enter Macau. Rumors to that effect are long-running, and it’s the only major gaming market in the region where the company doesn’t have a presence. For now, the prevailing wisdom is that the company entering Macau via the current retendering process isn’t impossible. But it’s not probable, either.
Macau may prefer the incumbents for their track record in helping local employment. But Genting group has surprised the market previously by winning New York City and Singapore competitive bids,” according to a Morgan Stanley note.
It’s possible Genting could pursue an acquisition to enter Macau. But of the six aforementioned established concessionaires, only SJM Holdings makes for a logical target at the moment. However, that company hasn’t said it’s for sale, nor has Genting announced it’s shopping for a Macau acquisition.
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