Macau’s Concessionaires Agree to Pay $12.5B Collectively in 10 Years

Macau is keen to get more bang for its license extensions concerning the casino industry in the Special Administrative Region over the next ten years. But before the administration grants any licenses, it would need some commitment on the part of concessionaires. One such commitment is for the six winners to invest a combined MOP100 billion ($12.5 billion) in Macau over the next 10 years, which is the period of the license.

Macau’s Concessionaires Happy to Cough Up

According to TDM Portuguese Radio, Sands China and Galaxy Entertainment Group have already agreed to invest MOP20 billion ($2.5 billion) each and found the request reasonable. A report by JP Morgan, an investment bank, suggests that concessionaires are happy to meet their financial obligations in order to secure a license extension. The remaining four concessionaires will pay a smaller amount each, around MOP15 billion ($1.9 billion) each. This should help meet the collective target which is what Macau cares for the most.

Commenting on these developments in a Monday note, JP Morgan analyst DS Kim said that this new development has assuaged fears that concessionaires would be met with impossible demands on part of the government. In fact, Kim added, the financial target is nothing out of the ordinary and confirms what JP Morgan already suggested – that the reapplication process should go without any major surprises.

Macau may be even more important to concessionaires now that the development of new projects has gone up significantly. Kim noted that even something as simple as renovation has come with a higher price tag these days, making operators and international gaming giants even keener to hold onto their assets which they have been developing for decades. The requested amount, argued Kim, was not impossible or unjust and would allow for operators to still be competitive.

No Expected Change in List of Existing Concessionaires

Kim commented on Genting’s proposed bid for Macau but noted that so far, there was nothing to indicate that the six companies applying for a renewal of their license were most likely going to have them approved. Genting, on the other hand, presently has no properties in Macau and is unlikely to receive a go-ahead from the government to replace one of the existing concessionaires.