In an expected move, the government of Macau has approved the extension of SJM Holdings and MGM China Holdings gaming concessions until June 26, 2022. This announcement came on March 15, and Macau said this was done to bring the operators in line with the city’s other operators, GGRAsia reports.
For the two-year extension, both SJM and MGM will pay MOP200 million (US$24.7 million) to the government. They will also have to join the city’s “Non-mandatory Central Provident Fund System,” and establish a labor creditor rights protection fund in the upcoming months.
Prior to this approval, the two operators were due to have their licenses expire in March 2020. The autonomous region wants to do “more in-depth studies” and possibly revise laws before having to consider longer extensions, and thus the two-year addition to their licenses.
According to the current laws, licenses holders can have a maximum of five years added to their license; however, once the license expires, they must seek a new international public tender to get a new license.
Grant Govertsen, analyst with Union Gaming Securities Asia, said in a note, “At some point in 2020 the new government and the legislature will begin studying the concessions in earnest, but will likely need a few years to come to any conclusions.”
He expects all six current concessionaires to receive extensions prior to the new June 2022 expiry date so that the big picture can be analyzed, and current laws reconsidered.
Don’t expect Macau to stay pat at just six concessionaires either. Govertsen predicts:
“At some point towards the middle of the next decade the rebid process will commence and we expect all of Macau Big 6 to remain in Macau; we also expect a 7th (or 8th) concession could materialize in part to clean up the service provider casino construct.”
To keep their licenses, Govertsen expects the current six licensees to go through a period of redevelopment. We’re seeing that already, as Las Vegas Sands has started their Londoner Macau renovations at the Sands Cotai Central.
Another analyst has previously suspected that Macau might use the concessionaire refreshment to mix things up, and remove some of the American operators in favor of a more favorable option for their Chinese neighbors.