ALREADY-TROUBLED CASINOS IN ‘STATE OF LIMBO’ AS TENDERING PROCESS REMAIN OPAQUE: SVA

November 29, 2021 Crime & Legal Industry Updates

THE Chief Executive’s (CE) reticence in his recent Policy Address regarding the upcoming expiration of the gaming licenses has added uncertainty to the already troubled sector, as it clearly illustrated “how rising political risk across China is directly affecting international investors.”
CE Ho Iat Seng previously remarked that a public tender process would take place after the expiry of current concessions – however, he did not provide further detail on timing, despite earlier commitments to complete a tender process by the fourth quarter of this year.
According to a report by political and corporate risk consultancy Steve Vickers and Associates (SVA), as no concrete plans have been announced the “tendering process remains opaque, leaving the casino sector in a state of limbo.”
“Macau is perhaps more acutely impacted by political risk than other PRC cities,” the report stated – a significant concern, as Ho has said little about the government’s plans for the sector, which generates 80% of Macau’s gross domestic product.
The SAR government announced back in September that they would change casino regulations to tighten restrictions on operators, including appointing government representatives to “supervise” gaming operators.
The announcement caused a massive record loss of USD18 billion in combined market value.
The report noted that as part of tightened regulatory arrangements, major foreign companies, such as Wynn Macau, MGM China, and Sands China, might have to increase the percentage of share capital held by Macau residents (currently at 10%), forcing casinos to become more “Chinese.”
“The Macau government seems, under direction from Beijing, determined to diversify away from a total reliance on casino gaming; and the looming end of the concessions provides great leverage to force through the necessary changes,” said SVA.