Who wants to bid on Macau casino licenses? EJINSIGHT

The Macau SAR government has set September 14 as the deadline for gambling operators to submit bids for new licenses, which are due to begin in early 2023. The licenses of the six current operators, including three Americans, will expire at the end of December. .

The Covid pandemic and resulting travel restrictions have caused the worst three years in Macau gaming history, and an end is not in sight. Add to that the strict conditions imposed on bidders by the government and the new gambling restrictions imposed by Beijing.

The industry therefore does not expect new bidders outside of the six. For them, the reason is that, without a new contract, they will be prohibited from next January from operating the casinos in which they have invested billions of dollars for more than 20 years.

The main deterrent to new bidders is the huge losses suffered by operators since the onset of the pandemic in early 2020. In 2021, gambling revenue in Macau fell to $10.8 billion from $36 billion. billion dollars in 2019.

Wynn Macau posted a net loss of HK$3.6 billion for the first half of 2022, compared to a loss of HK$2.2 billion in the same period of 2021. Uncertainty surrounding the extent and timing of the potential future spread or mitigation of Covid-19 and the imposition or relaxation of containment measures, management cannot predict whether future closures, in whole or in part, will occur at our properties and cannot reasonably estimate the impact on the group’s future operating results, cash flows or financial condition,” he said.

Beijing has followed the “Zero-Covid” policy and promises to continue it. This has severely limited the arrival of visitors to Macau, who make up the majority of casino customers. Strict quarantine measures have also excluded international tourists and visitors from Hong Kong.

Another downside is Beijing’s tighter control over gambling. A law passed by the National People’s Congress that went into effect on March 1, 2021 created a new crime against cross-border casinos found to be arranging or soliciting Chinese citizens to gamble and increased penalties for those found guilty of the offenses. serious. It specifically targets anyone who “organizes mainland Chinese citizens to play outside the country (borders)”.

In November 2021, Macau police arrested Alvin Chau, boss of Suncity, the city’s largest junket group, a day after Wenzhou accused him of “serious harm to the social order of the country” and involvement in cross-border gambling. Before the pandemic, VIPs accounted for nearly half of casino revenue.

A third deterrent to US bidders is political risk. What happens in the event of a Sino-American war or a military conflict over an invasion or blockade of Taiwan? Will the government seize or freeze US assets and detain US citizens?

A fourth are the conditions attached to any offer. “Particular attention should be paid to the development of foreign tourist markets. Experience in operating casino games, investing in gaming and other projects for the benefit of Macau, casino management plans, illegal activity monitoring and prevention plans, and social responsibilities,” the government said.

Writing in the August issue of ‘Inside Asian Gambling’, Andrew Scott said businesses don’t need to be told to attract more overseas visitors. “But Macau is doing everything it can to discourage international visits. Non-Chinese are not welcome. From the lack of spoken English or signage in English to foreigners living in Macau being treated like second-class citizens to Macau’s endless obsequiousness towards mainland China, foreigners simply don’t feel comfortable in the RAS these days. Access is difficult with flights to Macau almost all coming from mainland China.

The government is also asking bidders to attract more MICE (Meetings, Incentives, Conferences, Exhibitions). “Why would a multinational hold a major MICE event in Macau rather than Hong Kong, Shanghai, Tokyo, Bangkok, Singapore or just about any other major city in Asia?” said Scott. “Where is Macao’s comparative advantage? We do not have enough hotel rooms for large events, the rooms we have are relatively expensive and the transport infrastructure is lacking. We can’t even fully utilize the MICE facilities we already have, let alone build more. Another bust.

He said the development of health-based tourism was also hopeless. “Why on earth would people come to Macau for cosmetic surgery when they can go to Thailand or Korea, or even Vietnam, which has excelled in this type of tourism for decades. And when it comes to TCM (Traditional Chinese Medicine), what does Macau have more than any other major city in China? Nothing.

He said that by making these demands to the bidders, the SAR government was abdicating the responsibilities it should assume. “During the pandemic, these companies have suffered hundreds of millions, if not billions of dollars in losses and are now as a group burdened with debt that has grown from $5 billion to over $20 billion to fund these losses, but the government is asking them to invest in many doomed financial activities.Where does the money come from for all this?

“While the government itself sits on tens of billions of US dollars in tax revenue accrued over the past 18 years from one of the highest casino gambling taxes in the world, dealers are bludgeoned by Covid-zero (read economic-zero) and the government’s socialist economics style dictate that thousands of surplus workers continue to collect monthly paychecks despite being totally laid off – just so the number unemployment in Macau is not skyrocketing,” he said.

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