Posted on: November 25, 2022, 11:30h.
Last updated on: November 25, 2022, 11:47h.
At 11 a.m. local time tomorrow, Macau is expected to announce the winners of its competitive bidding process that will determine which six gaming operators are granted market access in the Chinese Special Administrative Region (SAR) beginning Jan. 1, 2023.
The gaming licenses that currently allow Macau’s six casino operators to run games of fortune in the SAR expire at the stroke of midnight on Dec. 31, 2022. In anticipation of issuing fresh concessions for an operating term running Jan. 1, 2023 through Dec. 31, 2033, Macau fielded applications from interested parties earlier this year.
With Macau strongly expected to maintain the status quo and issue the current six gaming firms fresh tenders, Macau fielded only a single bid from an outside company, Malaysia-based Genting Group.
Tomorrow, the Macau government will announce the six applicants that will be allowed to operate casinos beginning in 2023. The odds are good that Las Vegas Sands, MGM Resorts, Wynn Resorts, Melco Resorts, Galaxy Entertainment, and SJM Resorts will be issued the prized licenses, with Genting being the underdog that’s unlikely to be welcomed into China.
Macau local officials are hoping to appease Beijing’s wishes in the near future that the enclave diversifies its economy away from gaming.
China continues to crack down on the outward flow of wealthy mainlanders’ money, which has included the cross-border movement of capital to the tax haven of Macau. China President Xi Jinping has deemed the tens of billions of dollars moving from the mainland to Macau casinos as a national security concern.
Junket groups, which long catered to China’s wealthiest millionaires and billionaires by organizing first-class travel to Macau, have been forced out. Macau’s VIP travel planners began shutting down their businesses after Alvin Chau — the face of the junket sector who made his own billions by running Suncity Group — was arrested and charged with facilitating illegal cross-border gaming operations.
China wants Macau to become a business hub and offer more leisure entertainment. Macau will require the six casino operators named tomorrow to commit to investing a certain amount of capital into non-gaming projects during their 10-year tenure. The exact investment number will be determined after tomorrow’s announcement of the preliminary winners. But previous reports suggest the SAR government will seek as much as MOP160 billion (US$20 billion) from the six winners in new developments.
With junkets unlikely to keep Macau’s VIP high roller rooms lively during the region’s next gaming arrangement, analysts say the casinos could struggle unless such non-gaming investments are made.
If the intention is to attract international visitors in much larger numbers from Asia-Pacific within three to four hours flight time, Macau must significantly enhance its reputation as an international attraction of high quality products and services, rather than a Chinese dominated enclave for core gamblers,” gaming analyst Kevin Clayton wrote in a note published to LinkedIn.
“Up against Singapore, Malaysia, Thailand, Korea, and Japan, Macau has much work to do in correctly positioning Macau and its non-gaming assets and experiences,” Clayton added.