Macau Contemplating Putting a Stop to Casino Sub-concessions

When Macau first introduced legal casinos at the beginning of the century, three concessions were going to be allowed. Then, through some reshuffling and bureaucratic magic, three became six, with the latter three being authorized via sub-concessions. Now, as the city explores massive changes to its gaming laws, the idea of sub-concessions could go away completely. How that might impact the gaming scene still isn’t clear.

Macau Casino Concessions Under Review

Macau was expected to have its new gaming laws ready for review this month, but that no longer looks like a possibility. The latest in the regulatory restructuring includes a review of how concessions are issued, and a public consultation is now open for input. It will run until October 29, with the local community able to weigh in on their views of how Macau’s gaming market should look.

The existing concessions, some of which had to be given an extension already, are set to expire next June. Repeatedly, there have been calls for new extensions to be authorized due to the lack of a response from the government regarding how the city’s new gaming market will be structured. There have also been repeated calls for more concessions to be authorized; however, it now looks as though that won’t be a possibility. According to the city’s Secretary for Economy and Finance, Lei Wai Nong, “We don’t want to encourage any more sub-concession arrangements, because we want to ensure stability in our [gaming] concession system…they… should not expand endlessly.”

Macau’s Evolving Gaming Market

After initially approving three casino licenses, the Special Administrative Region (SAR) allowed Sands China Ltd, MGM China Holdings Ltd, and Melco Resorts and Entertainment Ltd to join through sub-concessions. The trio entered the city after working out deals with Galaxy Entertainment Group Ltd, SJM Holdings Ltd and Wynn Macau Ltd, all of which were approved for casino licenses through a public tender in 2002.

With only months to go before the existing concessions are to run out, and with no clarity on the new gaming framework, casino operators have been appealing for extensions. Macau’s government and gaming regulators have been relatively silent on what will happen next, only adding more anxiety to the entire process. However, Sands and MGM, in particular, are optimistic that the status quo won’t change too drastically and have been exploring how to build up their operations in Macau and Asia.

More Casino Oversight to Come

As part of the new gaming laws, it’s possible that Macau will become more proactive in how it monitors casino operators. According to Lei, in a conversation with GGRAsia, the city could appoint “delegates” to the six concessions, or whatever final number is approved, which would give Macau a “bigger monitoring” capacity. The delegate system is in place in the city for some types of public concessions, so adapting it to the casino industry wouldn’t be too difficult. The notion of using delegates to monitor casinos seems to fall in line with previous announcements that Macau plans on doubling the number of casino regulators.

Lei added, “We want to reinforce the monitoring on the gaming companies. I want to stress that our regulations need to be updated to ensure that the development of the gaming industry will be sustainable, and healthy.”

In the publication announcing the possible concession review, Macau made it very clear that it holds the strings that control casinos and that it isn’t afraid to cut them at any time. The document states, in part, that the SAR “has the responsibility to protect the interests and welfare of our public; while the gaming concessionaires are seeking to maximise their own profit… it is notable that these companies’ rights to operate gaming businesses stems (sic) from the Macau Special Administrative Region government’s grants of concessions.”