MACAU BUSINESS Cloudy 2021
In 2020, the local gaming industry witnessed something akin to a perfect storm whereby the massive impact of the COVID-19 pandemic and crisis met a new wave of crackdowns on VIP gaming by mainland Chinese authorities as stressed by Alidad Tash. What lies ahead is anyone’s guess. As Lee puts it, “the outlook for 2021 is pretty cloudy with a chance of thunderstorms along the way, meaning we are really unable to predict this year’s GGR with any degree of confidence due to a wide variety of uncertainties,
ranging from the as yet unknown efficacy of the vaccines to the resumption of outbound travel overlaid with strong anti gambling signals from the mainland.” For casino operators, the picture might not be as
gloomy as it seems at first glance. The year’s last quarter results will be telling. “Once operators start reporting their fourth-quarter results, we should expect to see a far worse performance for VIP relative to mass gaming. The good news lays in the fact that VIP drags down the gaming revenues far more than it drags gaming profits,” Tash points out.
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Pandemic dela ed gamingandemic delayed gaming law revaw revision, conces extension on the table
xtension on the table
hief Executive Ho Iat Seng said that the Covid-19 pandemic has further delayed legislative works for revising the local gaming law and considered that extending the current gaming concessions was just one of many options being considered.
A legislative review to the current gaming law is a necessary
step ahead of a public retender process for Macau gaming rights, linked to the expiry in June 2022 of the existing six gaming concessions. The 2021 Policy Address document published in
November revealed that that the draft of the revised gaming law could be submitted to the Legislative Assembly (AL) by the last quarter of 2021, depending on when the public consultation process is initiated.
“Because of the pandemic we delayed some works for the public consultation but we are making efforts to go forward. It is work that needs to be done. It will take place in the second half of 2021” Ho noted. Speaking after the Macau SAR 21st handover anniversary
ceremony, Ho refused to comment on these predictions and stated only that a public concession delay was just another possibility that was being considered. “We are still consolidating the legal framework […]. It is hard
to comment because it relates to the future development of Macau. When we have a complete legal framework we will reveal more details. Everyone can make predictions,” Ho noted.
Gov’t likely to extend gaming licenses until 2025 – Brokerage
Analysts from Morgan Stanley believe that the Macau government will likely extend the current gaming concessions beyond the current 2022 deadline by three years, due to the impact of the Covid-19 pandemic. According to a note issued by the brokerage, the Chief
Executive will likely extend the current concessions by three years, considering the current legislation only allows for a five-year extension and the SJM/MGM China concession was previously extended by two years to match the remeaning concession’s deadline.
18 FEBRUARY 2021 essions
One of the reasons Morgan Stanley predicts this outcome is the pace of the process to review the current gaming law and the required steps to prepare the public concession process. ‘The market is hoping that the new gaming bill will be voted in the Legislative Assembly (AL) and the public consultation can be concluded by 4Q21, so the decision on license extension can be finalized by 1Q22 (expiring in June 2022),’ the brokerage noted. ‘For open bidding to happen, Macau has to run a public
consultation (earlier planned for 2H20), and then put the new law in the AL (the draft is not ready yet), which could take more than a year’ For Morgan Stanley, if the public consultation is done and the
new gaming law is passed in the AL before the third quarter of 2021, it is possible to run an open bid for the gaming license.
City of Dreams best performer in Jan-Sept gaming results
Gaming operator Melco Resorts held the largest percentage of gaming revenue generated in the Macau SAR for the first three quarters of 2020 thanks to the performance of its City of Dreams property, according to a report by newspaper Tribuna de Macau. Citing reports by Sanford C. Bernstein and Deutsche Bank for
the January to September period, the newspaper indicates that Melco held a 24.6 per cent share of local gaming revenues, followed by Sands China (19.5 per cent), Galaxy Entertainment Group (18.8 per cent), SJM Holdings (16 per cent), Wynn Macau (12.5 per cent), and MGM (8.6 per cent). In previous years Sands China and Galaxy held the highest
percentage of local gaming results, holding almost half of reported results.
Local casinos generated some MOP38.6 billion (US$4.8 billion)
in gross gaming revenues in the first nine months of 2020, an amount 82 per cent lower than in the same period last year as the Covid-19 pandemic seriously impacted the local gaming sector. The current top position held by Melco was mainly attributed to
its City of Dreams property, the best performer in January to September period of the city’s 41 casinos, with some MOP6.4 billion generated, followed by Galaxy Macau with MOP5 billion and Venetian with MOP2.8 billion.
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