Sands China Inks $377M Trademark Renewal with LVS

There is a lot of uncertainty about the region’s recovery, however, continued developments and large investments by operators are enough to make some more optimistic. Sands China is the latest licensee that’s had to make some changes to comply with Macau’s gaming law updates, and this trademark agreement is a natural step in the company’s operational procedures.

New 3-year Trademark Agreement

Sands China is the Macau-based arm of Las Vegas Sands (LVS), and it announced that its brand licensing agreement has been renewed for three years, starting January 1, 2023. The agreement is scheduled to last until December 31, 2025, and the license cost Sands China $377 million.

The current Second Trademark Sub-License Agreement expires on December 31, 2022, and the new International Trademark License Agreement will grant various Sands China subsidiaries, such as Venetian Orient Ltd, Venetian Macau Ltd. (VML), and others, access to LVS-trademarked brands. This follows an identical framework to previous agreements.

The new license agreement mandates Sands China to issue annual payments, which are calculated based on a percentage of the revenue that the group’s gaming (GGR) and non-gaming operations generate.
According to a report from World Casino Directory, the total payment of $377 million is divided into three predetermined installments capped at $114 million for 2023, $125 million for 2024, and the remaining $138 million for 2025.

Operators Preparing for Next Year

The announcement of the new trademark license agreement comes just a bit over a week after Sands China’s gaming concession renewal was made official. The company’s Macau operations received one of the six available licenses.

That came with some additional changes to accommodate Macau’s updated gaming laws. Namely, one of Sands China’s subsidiaries– VML – underwent a share capital restructuring, receiving a MOP$4.8 billion(almost $600 million) investment to keep in line with the new regulation.

Wynn Macau made a similar move, also aimed at complying with the new laws. It had to increase its own registered capital by a similar amount since all operators from the previous round of concessions were required to only hold around MOP200.1 million (approximately $24.6 million) in capital on hand.

Although the region’s gaming market is currently heavily affected by China’s zero-COVID policy, the latest updates to regulation were aimed at reducing the operators’ income dependency on gaming, mandating an increase in non-gaming revenue. This, coupled with the requirements for further investments by concessionaires, makes the outlook for the special administrative region (SAR) more nuanced.

However, the SAR is still cautious about its projections for the industry’s performance next year. This was clearly evident in its 2023 GGR target, which was set at MOP$130 billion ($16 billion) for the third consecutive year.

There are multiple factors at play, and the SAR is not sitting on its hands to try and avoid further decline in the industry. However, since neither another pandemic resurgence nor China’s related regulations are under the SAR’s control, the attentiveness surrounding projections for the region is understandable.