Macau’s government said on Saturday its six incumbent casino operators would be given new licences to operate in the world’s biggest gambling hub from January, with Malaysian operator Genting missing out on a spot.
The highly anticipated announcement signals stability and continuity for the Macau operators who have invested more than $50 billion in the Chinese special administrative region in the past 20 years. But the requirement to spend on theme parks, music and sports adds to financial pressure at a time when revenue has plunged under anti-virus restrictions.
Officials in Macau, the world’s biggest casino hub, told a news briefing the main considerations for granting licences included ensuring local employment, developing overseas tourist markets and developing non-gaming projects.
Genting Malaysia had been considered a credible threat for a Macau licence due to its strong non-gaming track record and mass market appeal, fitting key criteria for Beijing which is adamant that Macau diversify away from gambling and attract foreign tourists.
The company did not immediately respond for an email request for comment.
If any incumbents had lost, they would have had to return the casino area to the government for free at the end of this year, making it financially unviable to operate the remaining facilities as gambling accounts for 80% to 90% of total revenue.
Sands China, Wynn Macau, Galaxy Entertainment, MGM China, Melco Resorts and SJM Holdings, have operated in the Chinese special administrative region since 2002. Their concessions expire at the end of this year.
“We are committed to Macau and its development as Asia’s premier tourist destination,” Lawrence Ho, chairman and chief executive of Melco, said in a statement.
The territory of 700,000 people on a peninsula in the South China Sea is the world’s most tourism-dependent economy. It’s under pressure from Chinese President Xi Jinping’s government to diversify with retailing, entertainment and other industries and to reduce reliance on gamblers from the mainland, its main revenue source.
Macao’s economy has shrunk since anti-virus restrictions that shut down most tourist travel were imposed in 2020.
The decision to allow in foreign-owned casinos in 2002 brought a flood of money to Macao. The six license holders operate a total of 41 casinos.
Annual revenue from slot machines, dice tables and other games peaked at $45 billion in 2013, more than triple Las Vegas’ level. But it slid after Beijing tightened controls on how often mainland gamblers could visit.
By 2019, before the pandemic, gambling revenue sank 19% from 2013′s level to $36.4 billion. In 2020, it collapsed 80% to just $7.6 billion. Last year, revenue climbed back to $10.8 billion, but that is down 75% from 2013.
Adding non-gambling assets would make Macao more like Las Vegas. Casinos there try to attract families and non-gamblers with roller coasters, music, shopping centers, art exhibits and water parks.
SJM operates a zip line and indoor skydiving attractions. It dropped a proposal for a Hello Kitty theme park. The tycoon behind Galaxy talked about a possible theme park resembling the movie “Avatar,” but it never went ahead. (Reuters/AP)