Opinion
MACAU Licences
In 2011, less than one per cent of the visitors to Macau accounted for 73 per cent of the monies gambled there. The VIP segment accounted for 53 per cent of the gambling hub’s overall gaming revenue throughout 2016. That’s a definite improvement on the previous year, but still some way short of its 73 per cent peak in 2011.
any amendment to the gaming regulatory framework will have to pass through the Legislative Assembly.
On the other hand, no one can guarantee that the government will allow new sub-soncessions once these terminate, nor should the number of six gaming operators be taken for granted. In any case, the government will most certainly ensure that the renegotiation of the current concessions and/or sub-concessions is done simultaneously, i.e., by extending SJM’s concession, and MGM’s sub-concession, in order for both to end at the same time as the remaining concessions and sub-concessions, i.e., in 2022.
Muddying the waters even further are the third- party or satellite casinos, which rely on the gaming permit of one of Macau’s six licensed casino operators, but which are under the
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management of a third-party, despite the fact that satellite venues are banned in Macau.
WHAT IS A THIRD-PARTY CASINO? Tird-party casino operators cannot secure a
license themselves, so they piggyback upon the licence of the six main operators. At present, 19 such third-party casino operators are active in the territory, mostly in the Macau Peninsula. Te city of Macau officially lists 35 operating casinos. SJM Holdings sub-licenses with 16 different satellites. Galaxy Entertainment has three licensees, while Melco is associated with one of the piggybacking operators.
Te difficulty for Macau’s government as it moves into the concession renewal process, is that the original tenders specified that there could be three concession contracts and three sub-concession contracts, allowing for a total maximum of six casino operators in Macau.
A concessionaire’s right (and obligation) to operate casinos is, by law, unassignable to third parties… except with previous government authorisation. Tis exception found its way into the 2001 gaming law and effectively created a backdoor. Te move was deliberate and was simply the way things were run under Stanley Ho’s monopoly. Te pie was shared with a tangle of smaller players. Tese represented different interests of the local business community and operated with a substantial degree of autonomy vis-à-vis the concession holder.
As a result, there are currently 16 active satellite casinos – almost as many as the number of casinos directly operated by all six concessionaires. Such casinos require incomparably less investment than a Cotai IR and add little value to the city’s tourism supply. Tis ultimately affects the market’s bottom line and the return on investment of quality integrated resorts.
AN EVER TIGHTENING GRIP Opening up the market to foreign investment
was the most influential decision made by the government in the shaping of the industry in today’s Macau. It allowed foreign expertise to influence Macau and restructure the operation
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