The current international trade war between China and the United States could impact US casino operators’ ability to renew their Macau concessions, according to a new security report.
The report by political and corporate risk consultancy Steve Vickers & Associates (SVA) describes Macau’s gaming sectors as “highly exposed” to fallout from the trade spat, which has seen the two nations hike tariffs on a wide variety of products in a rapidly escalating game of political brinksmanship that could leave both countries bleeding.
SVA says Macau casino operators could experience a “dampening” of gaming revenue should the trade war lead to “any significant slowdown or fall in the yuan’s value” from Beijing’s “further curbing of capital outflows.”
Such a scenario could benefit local junket operators, whose entire business model revolves around circumventing China’s capital controls. However, SVA estimated that this gain could be modest due to the junket industry now being “more closely monitored’ by Beijing authorities than in years past.
As for longer term concerns, SVA notes that all six Macau casino operators are facing the renewal of their concessions between 2020 and 2022. Three of the concessionaires are majority controlled by US companies – Las Vegas Sands, MGM Resorts and Wynn Resorts – that SVA claim “sit on a geopolitical fault line. Their Macau concessions can therefore be on the line.”
Sands in particular could face a rough concession renewal process, given the company’s founder Sheldon Adelson’s close ties to the US Republican party and current US President Donald Trump, the architect of the current trade war.
Discussing the report with the Macau Daily Times, SVA boss Steve Vickers noted that Adelson had been among the top financial contributors to Trump’s 2016 presidential campaign. Vickers cautioned that, while going after Adelson would likely prove a tempting target for Beijing, the idea is currently “only a possibility.”
Vickers told GGRAsia that Beijing had a number of options to “get tough” with the US, but claimed the likelihood of Beijing taking the “most brutal” option of refusing outright to renew US casino operators’ Macau concessions was “currently unlikely.” However, Trump’s unpredictability and willingness to take risks to avoid looking weak means no one really knows how the current situation will resolve itself.
