Macau's concessionaires sign extensions, detail plans for non-gaming investment

After a busy year of negotiations, Macau’s six incumbent concessionaires finally signed their new ten-year contract extensions on Friday during an official ceremony attended by casino representatives and government officials. All six concessionaires received confirmation that they would have their licenses extended in late November, but last week marked the signing of the binding contracts between the government and operators.

The decision came as a relief to the six companies that have invested billions into the Special Administrative Region (SAR) and which had to navigate a ream of new rules that, among other things, put a strong emphasis on non-gaming investment, overseas gambling visitors, and segregation of gaming revenue derived from Chinese and non-Chinese citizens.

The renewals are an important step forward for the SAR, reports South China Morning Post, with Macau Chief Executive Ho Iat-seng among the officials to sign off on the new ten-year extension. The new concessionaires are familiar faces, of course, as they have been running the show in Macau’s gaming industry since the beginning. They include Galaxy Casino, Melco Resorts Macau, Wynn Resorts Macau, SJM Resorts, MGM Grand Paradise, and Venetian Macau.

An attempt by Genting Malaysia to take over one of the concessionaires’ slots was quickly shut down by Macau, but briefly added to the excitement and unpredictability of the tendering process. And yet, the biggest challenge today remains not the arrival of new concessionaries, but rather how existing ones would navigate the new rules. Macau concessionaires are now said to have boosted their non-gaming spending to $26.2m collectively on weekly basis.

Out of these, Sands and Galaxy Casinos will be spending $6.7m and $6.6m per week on non-gaming operations. Wynn Macau has confirmed that its total investment ought to amount to $2.2bn for non-gaming over the next ten years of operations, with the company demonstrating its unfaltering commitment to remaining present in the SAR and in good favor with the local government.

Melco and SJM bring up the rear with investments of $2.4m and $2.9m, but still considerable sums relevant to their market share. The $26.2m will give local businesses in Macau a strong boost that the government hopes could help reduce the SAR’s dependency on gaming revenue and shift the focus on traditional tourism.

Secretary for Administration and Justice Andre Cheong confirmed that Macau would expect concessionaires to provide a detailed account of their annual non-gaming spending in a detailed report submitted to the SAR at the end of September each year.

"We hope that the development of exhibition centers, performances, sports competitions, and other non-gaming activities can attract more tourists to Macau," Cheong added. Immediate prospects for gross gaming revenue are not too positive, but there is cautious optimism that results in the gaming sector could start picking up from March onwards, provided that traveling restrictions are not in place and Chinese and Hong Kong visitors return.

However, the shift over the next ten years will be almost exclusively on gaming revenue generated by overseas travelers. A spanner in the works may come from the fact that Macau wants to segregate between Chinese and non-Chinese players and has urged concessionaires to try and attract gamblers from abroad and not target people in the mainland or Hong Kong.

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