SJM Expects Macau to Cut the Casino License Validity Period to 10 Years

SJM Resorts officials are convinced fresh 2022 tenders are in line for all six operators that are currently in business in Macau. However, it is the company’s belief that the licenses will not last as long as they did before. When Stanley Ho’s monopoly on the gambling market was ended by Macau, which is at the same time when the territory was returned to China after being in Portugal’s control, all new operators in the region received a warm welcome by being provided with permits that lasted for 20 years. That could be about to change.

Macau Is Currently Reviewing the Gambling Industry

After a lengthy 2002 review, SJM, together with Wynn Resorts and Galaxy Entertainment received the aforementioned 20-year licenses. Additionally, reputable operators, such as MGM Resorts, Las Vegas Sands and Melco Resorts entered the market later on, as they received sub-concessions from the three operators that were fully licensed. But, all of that is likely to change as Macau is deeply reviewing the gambling industry. In the current review, the number of licenses and the future of the casino market are being discussed.

SJM Resorts, which was previously known as SJM Holdings, is now the empire of the late Ho. This week, it stated that it expects all of its six operators in the region to gain new licenses that will last for ten years and will allow the giant to continue working in the Chinese Special Administrative Region until 2032. Macau has been hit hard by the pandemic and it seeks recovery in numerous ways.

The SAR’s lawmakers are working with Macau’s Gaming Inspection and Coordination Bureau (DICJ, for its Portuguese acronym) to determine the process of licensing in 2022. At the moment, the enclave is amid a consulting period of 45 days that involves numerous stakeholders, investors, the general public, the casinos, as well as Beijing.

The Licenses Are Likely to Add Value to the Market

According to some rumors, the drastic changes in the Macau gambling market led to the casino stocks dropping in value and, thus, losing tens of billions of dollars in the previous week only. However, with SJM and some firms, including Sanford C. Bernstein, which have been forecasting the new six licenses, some of the tension has been eased.

SJM, the oldest gaming operator in Macau, informed Goldman Sachs that a 10-year license is extremely reasonable and reps from the company said that Macau will be able to learn from Singapore’s playbook.

Singapore is known by many as a country that is perfecting the integrated resort business. In the country, there is a casino duopoly which is held by Malaysia’s Genting Group and Sands. Before the pandemic hit, both of these companies received 10-year license extensions, but with one interesting condition – they had to invest a minimum of $3.3 billion in their properties.

As for Macau, it is likely for all six operators to remain operational long after 2022. Thanks to that fact, its stocks went up and the companies recouped some of the losses from last week. During that week, all six operators lost a total amount of $18 billion in market capitalization. On Tuesday, the shares of the companies that were listed on the Hong Kong exchange climbed by 4.3%. On Wednesday, they made more gains – MGM China was up 3.8% in stocks, Sands China was up 3.1%, Galaxy Entertainment 3.2%, Wynn 1.9%, Melco 2.5% and SJM climbed 2.2%.

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