MACAU BUSINESS Exhausting quota There were 5,998 gaming tables by this
year’s second quarter, the latest official figures reveal. Considering the 300 tables granted to the two new projects of Sands China and Wynn Macau, Union Gaming Securities Asia Ltd., a boutique brokerage focusing on gaming, expects there will still be 797 new tables for new and existing projects until 2022 if the table cap remains in place. “With only two major projects yet to come online, and perhaps the reality of a new baseline of 150 tables, the government will have plenty of dry powder to allocate significant batches of tables in the out years,” said Grant Govertsen, an analyst at Union Gaming. He refers to the two projects of MGM China Holdings Ltd. and SJM Holdings Ltd. which are slated to become operational next year. Apart from the two new mega projects in the pipeline there are still two small casinos scheduled to be ready in the near future, including The 13, a luxury hotel developed by entrepreneur Stephen Hung, and the new casino at Macau Fisherman’s Wharf, controlled by casino services firm Macau
Legend Development Ltd. Authorities say they have yet to receive requests from casinos for the two sites. Legislator Ella Lei Cheng I said the
government should not grant tables for the sake of fulfilling the quota under the 3 per cent table cap, handling any requests for new tables, she says, based on the details of the project and the past performance of the operator.
Transparent mechanism The legislator also criticised the lack of
transparency behind the table allocation mechanism: “The government does not publicise much information with regard to the tables like the utilisation rate in each casino… so it’s difficult for the public to judge whether any grant is reasonable.” She proposes an annual review for the authorities to raise or reduce the total number of tables a gaming operator has in accordance with a basket of factors like the support of non-gaming elements and local employment. Edmund Loi Hoi Ngan, lecturer at the Social, Economic and Public Policy Research Centre of Macau Polytechnic
Institute, says the current table allocation mechanism should be improved. “The government now considers a number of factors before proceeding with any table request but it is not clear how it evaluates each application based upon the established framework,” he said. “For instance, everyone has different interpretations of non-gaming elements [that a project should have].” As the city’s six gaming licences will expire by
2020 or 2022 and are up for renewal Loi believes the administration should seize this opportunity to detail a more detailed framework concerning table allocation mechanism. Following the confirmation of only 150 new
tables for Wynn Palace, brokerage Union Gaming downgraded Wynn Macau to ‘hold’ from ‘buy’ given the concerns about “how an operator can ultimately get to where they need to be on a longer term basis with only 150 tables on a more than US$4 billion investment.” With regard to the prospects of the project, Wynn remained confident, saying, “The focus should not be on the amount of [gaming] tables but the amount of people that are here”.
22 OCTOBER 2016
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