Macau cuts satellite casinos some slack – for now

Macau is still tinkering around with its planned reregulation of the gambling industry and the Second Standing Committee of the Macau Legislative Assembly is trying to create overall market conditions that will allow concessionaires to remain competitive while the special administrative region achieves all of its pre-set goals.

During a recent meeting including the Second Committee President Andrew Chan Chak Mo, a new bill was introduced that would enable satellite casinos to continue to operate in properties that are not owned by Macau concessionaires – as was originally proposed – even beyond the three-year grace period they would have to relocate.

This means that the search for real estate and the slowdown in financial operations will have to wait. However, casinos that choose to remain off-property from approved gaming concessionaires will have to end their revenue-sharing model at the end of their three-year grace period. The Legislative Assembly is still not clear on this detail, but current discussions suggest as much. Any ambiguity should be clarified before long, enabling local satellite casinos and their operators to know what to expect in the next three years.

Despite this grace period, and lawmakers’ admission that it may be a little too hurried, the realities of it remain. The proposal has been dubbed "satellite casino killer" simply because it would be very hard to get satellite casinos into the same properties as the main concessionaires in Macau.

Put this way, satellite casinos are used to collect more revenue, not to bring them into your backyard where they will be vying for the same customers you are already working hard to get in the first place. Macau recently discussed another proposal whereby casino concessionaires will be granted a further reduction of some of the applicable tax levies if they manage to focus more on overseas or "foreign" gamblers instead of people from the mainland.

Without junket operators to facilitate this process, Macau’s concessionaires would have to rely on their own know-how or possibly team up with promoters from beyond Macau and China to make it possible. The three-year grace period has been called hollow succor for the massive regulator changes that are coming to Macau.

The good news, for now, is that Macau may be realizing how impractical bringing satellites and concessionaire operations under the same roof is, giving itself some more time to figure out how to proceed next.

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