Macau Amendments Back Six Operators, Ten-Year Concessions

January 14, 2022
Macau’s next era of casino gaming will see a maximum of six operators holding ten-year concessions, according to a government summary of draft legal amendments announced late Friday.


Macau’s next era of casino gaming will see a maximum of six operators holding ten-year concessions, according to a government summary of draft legal amendments announced late Friday.

The all-important draft amendments to Macau’s casino law, announced on Friday (January 14) with less than a day’s notice, signal that Macau officials will launch a tender for new operators this year without substantially extending the current concessions, if at all.

Initial details released at an Executive Council press conference include the awarding of a maximum of six concessions for a maximum of ten years each, down from 20, with possible extensions of up to three years.

The awarding of six concessions is a de facto retention of the current state of play — in which three concessions and three sub-concessions operate in the market — and therefore offers existing operators a degree of comfort heading in to a likely rushed tender that would be of limited interest to new rivals.

The summary also suggested a walking back from the contents of a hardline consultation paper released in September that yoked operator boardrooms to scrutiny by government-appointed delegates and allowed the government to vet all dividend awards.

These elements were not included in the press conference, nor in an accompanying government statement summarising the changes.

Copies of the draft amendments were not presented at the press conference and online government media did not immediately release the document, which has instead been sent to the Legislative Assembly before being released to the public.

The amendments flagged on Friday started with the ambiguous, such as the need for the gaming industry to conform with “safeguarding the security of the nation” and Macau, and to promote an “appropriate” degree of diversification of Macau’s economy.

Other changes are much clearer, with registered capital of concession holders rising to 5bn patacas ($624m) and locally resident managing directors holding a minimum 15 percent of shares.

The precise wording of the document remains an issue of concern for the industry, said António Lobo Vilela, a former advisor to the secretary for economy and finance and author of the book series Macau Gaming Law.

Lobo Vilela told VIXIO GamblingCompliance that managing directors may struggle to find the volume of capital needed to meet the 15 percent requirement in an arrangement that does not accord with the lesser influence they hold.

He added that the amendment to registered capital does not acknowledge that, in Macau, this sum refers to a creditor’s guarantee in case of default, not the degree of potential investment.

Another amendment that will affect casino operator SJM Holdings in particular seems to give concessionaires a three-year grace period to transition “satellite” casinos — effectively franchise operations whose profits dominantly flow to external companies — to the new regime.

The amendments are set to be fast tracked for debate in the assembly, potentially permitting a tender to be launched for concessions before the expiry of current concessions in June.

The release of a consultation paper on the amendments in September hammered Macau-linked gaming stocks on Wall Street and in Hong Kong because of potentially invasive elements such as dividend vetoes and boardroom monitoring that would make concessionaires more accountable to the government.

But a follow-up government position in late December that followed public and industry consultation took a softer stance on some measures, providing relief to some commentators and foreshadowing the apparently milder document sent to the Legislative Assembly.

Macau's Legislative Assembly, largely appointed by the government and industry groups, has become something of a rubber stamp body in recent years and is unlikely to substantially change the amendments as tabled.

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