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Macau’s three casino concessions, in coordination with the government, have announced the permanent closure of all 11 “satellite” casinos by the end of 2025, with two of the largest possibly converting to concessionaire operations.
The historic move ditches the original plans of the government and concessionaires to operate at least some of the 11 casinos under satellite management if their properties were acquired or leased by the concessionaires themselves.
It will also bring decades of venerable gambling culture, supply chains and economic networks to a rapid end, impacting at least 320 shops near satellites, according to government data released on Monday.
The sudden dislocation has forced the government to assure the industry and the community that some 5,600 local employees will be transferred to other casinos rather than retrenched, and 480 gaming tables and 270 gaming machines transferred within their concessions rather than forfeited to the government.
However, the fate of more than 400 foreign or mainland Chinese employees remains unclear.
SJM Holdings, which has nine of the 11 satellite casinos in its stable, said in a Hong Kong stock exchange filing on Monday (June 9) that two of the most lucrative satellites of the nine could be absorbed into the company’s operations.
The first is Casino L’Arc Macau, whose imposing, long-unfinished hotel was eventually overshadowed by SJM’s Grand Lisboa tower, and which is controlled by SJM co-chair Angela Leong.
The second is Casino Ponte 16, a property with a long and substantial shareholding link to SJM, which controls 51 percent of the joint venture, and whose property includes the luxury hotel Sofitel Macau.
SJM chair Daisy Ho said in the statement that while the company will “proceed with negotiations toward the potential acquisitions” of the properties, “detailed terms have not yet been negotiated, and no binding agreement has been reached or signed”.
This statement appears to reflect the secrecy with which the decision to pull the plug on the satellites was conducted, likely in collaboration with the government, which prepared press conferences to explain the transition even as the concessionaires issued their bourse filings.
Administration and justice minister André Cheong said at one press conference that the closures were entirely a “commercial decision” on the part of the concessionaires, and that any ongoing gambling operations at L’Arc Macau and Ponte 16 will require government approval.
Cheong was not asked how the three concessionaires with satellite casino interests came to announce the closures on the same day.
But he said that the demise of the satellite sector amounted to a “positive” development for gambling regulation.
Satellite operators were unprepared for the news, forcing one Hong Kong-listed company, Casino Kam Pek Paradise operator and gaming machine manufacturer Paradise Entertainment, to suspend trading before announcing that the operation was doomed, taking with it 66 percent of the company’s revenue.
Paradise Entertainment shares were down 8.3 percent by the close of trading on Monday, while other impacted satellite casino listcos Macau Legend and Emperor E Hotel were down 7.1 percent and 14.7 percent, respectively.
Shares of Casino Ponte 16’s major investor and SJM partner, Success Universe, were up 118.2 percent on news of the SJM plan to acquire the property.
Melco Resorts was the first company on Monday to announce the closure of its satellite, Casino Taipa Square, along with three of its six Mocha Club gaming machine parlours.
But the trading halts in Hong Kong and media flurries around economy and finance minister Tai Kin Ip and the gambling regulator quickly indicated that the government’s plan to neuter the satellites’ beneficial owners had been upgraded to a general cull.
Galaxy later confirmed the pending closure of its surviving satellite, Casino Waldo, in statements to local media.
As for SJM’s other seven satellites, all will cease to exist by the end of the year, including older, famed properties whose notorious triad links and segment appeal faded as regulation tightened and corporate Chinese and American operations exploded across Macau, especially in the Cotai precinct.
The seven SJM closures will take down six peninsula casinos and a casino in Taipa, with Hong Kong-listed company Kingston Financial Group losing two operations – Casino Casa Real and Taipa’s Casino Grandview.
Notoriety
Macau’s satellite casinos, which, along with three “sub-concessions” in the mainstream market, were also notorious for their legal standing, with regulatory loopholes allowing the casinos to function like junket operators and with considerable secrecy, as if independent of the concessionaire hosting them.
In the modern licensing era, they served as legacy operations and provided Macau with a safety valve for rival triad businesses transitioning from the chaos and violence of the last years of Portuguese rule.
But they also ensured that the Macau casino market maintained a level of diversity, intimacy, personality and customer demographic sensitivity amid powerful corporatisation of a sector dominated by cavernous gambling floors, endless corridors of boutique shopping and hotels with hundreds of rooms each.
For a significant period, SJM satellites generated more gambling volume than SJM’s casinos, leading legal experts to wonder, as the first concession era wound down, what the government would do with this de facto additional concessionaire controlled by a gaggle of larger-than-life entrepreneurs, triad bosses, former and current Macau lawmakers, rogues, and at least two international fugitives.
But with new concessions in 2022, an updated casino law and tougher regulations, as well as the breath of Beijing on their necks and the scourge of unprecedented commercial damage from the COVID pandemic, many operations closed before the government offered satellite operators the crumbs of a non-revenue-sharing management deal.
