Earlier in the year, analysts predicted that the government of Macau would restate the SJM Holdings casino concession and its Pansy Ho and MGM licenses, both which are expiring in March 2020 for at least two years up to 2022. This would align the concessions with the other major ones in the city. While SMJ Grand Lisboa Palace worth $4.6 billion will might not even open before March 2020, the thought was that the government would provide both assurance and clarity to the heavyweight investors. These predictions did not come true, at least so far.
For many, this is the showcase that the so-called world of Old Macau is still alive and well – the world where backroom deals are the default way how anyone gets anything done. In the same system, public policy is not something discussed in a transparent manner, but an intricate reading of tea leaves through cryptic messages from low-level officials at seemingly unimportant events. Now, many point out that the government of the biggest gambling hub in the world must do a much better job.
The Casino Share Drop
Earlier this year, the casino stock of the Macau operators took a huge nosedive. This occurs partly because of the high level of investor anxiety related to the expiration of the concession. Now even the upcoming big openings and major infrastructural investment, like the HKZM Bridge do not offset this present danger to casino investors. Macau officials stated that the law asks for open tender related to casino concessions, but this is not providing much comfort to the investors. Already, it is clear that the law does not good a good job separating concessions for the gaming areas from those related to hotels and other hospitality facilities.
In Macau, like anywhere else where big casino resorts are located, these two industries are tightly connected. This is not stopping many from believing that the Macau government could confiscate both types of facilities if the concession renewal process goes through. Another factor in the Macau concession jigsaw is the switch in the governing body of the enclave. Its new leader will most likely be known by August 2019, so a decision on this issue could appear even sooner.
In any case, whatever it might be, a big part of the Macau gaming industry feels let down by the government. In a place so drastically depending on the gaming revenue, this is not a far-sighted approach, especially with pending Japan’s entrance on the global IR casino scene.
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