The trade war between China and the US is not showing any sign of abating. Not surprisingly, it is also impacting the biggest gambling hub in the world. Macau might not feel the impact on the tourism sector, the credit squeeze for many Chinese VIP gamblers is clear in the enclave. This has brought about a hit on the overall profits, visible in the falling GGR (gross gaming revenue) across the city.
Yet, the desire of the situation, the analysts believe that the American casino operators are not in more risk than the rest. According to reports, including those from the analysis from the company Sanford C. Bernstein, the trade war is not impacting the US operators. Previously, some speculated that the same operators, which include MGM, Wynn and Sands will not see their license get a renewal. The current ones will expire in 2022. However, analysts again do not see this as a likely outcome.
Future of the Trade War
Most do not doubt the fact that the relationship between the US and China is a potential danger for the operators. However, most analysts agree that the licenses and gaming concessions are not under threat. Yet, if the relationship sours further, anything could become a piece on the economic battlefield. Now, all six concessionaires, including the US companies, will see their renewal in two years from now.
The operators might see their license costs go up, but operators are likely ready for this. Otherwise, the government of Macau would be in uncharted waters with the problem of unassigned licenses. In theory, that could be avoided with the introduction of new operators, but it is doubtful that Macau industry would take that well.
This is further underlined because the demographics of the customers are moving away from the all-Chinese visitor cohort. Instead, with a rising global appeal, Macau would not want to alienate not just US guests, but also those coming from the EU and many other regions of the world. Still, most acknowledge that all of these scenarios are riding on the trade war and its resolution.
If it comes under control and some kind of a compromise, the US operators will be relieved. If it continues to escalate, all three companies will likely begin making and updating contingency plans. These would end up a lose-lose scenario, but so far, the entire trade war is one such prolonged venture.
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