The Macau government has extended the gaming concession and sub-concession of SJM and MGM respectively by two years and three months until June 26, 2022, bringing them on par with the city’s two other gaming concessions and two sub-concessions.
The government announced the two extensions in a statement on Friday, followed by a press conference at Government Headquarters headed by Secretary for Economy and Finance Lionel Leong Vai Tac whose portfolio oversees Macau’s vitally important casino industry.
According to the statement, the SJM concession and MGM sub-concession were originally slated to expire in March next year. Based on the SJM’s request last month to extend its agreement, the government decided to extend it until June 26, 2022. MGM’s sub-concession was extended accordingly.
The statement indicated that the two extensions mean that Macau’s three gaming concessions and three sub-concessions will expire at the same time, which would benefit the government’s preparations for holding an international public tender for the granting of gaming concessions. According to the statement, this would also benefit social stability, namely in the labour market.
Based on the arrangement, Macau’s six gaming operators will be able to rebid for their concessions – or sub-concessions – at the same time before their respective agreements expire in June 2022.
The government has so far stayed mum on the rebidding process.
Reuters on Friday quoted Union Gaming analyst Grant Govertsen as saying he believed that the two extensions have more to do with the ultimate task of making the rebidding process easier, “while at the same time making sure the labour market remains stable”.
According to the extension agreement, SJM and MGM are required to pay a one-off fee of 200 million patacas each.
The two extensions had been widely expected.
Leong said at the press conference that the post-June 2022 future of the local gaming industry would result from the outcome of the international public tender that the government was planning to hold.
Leong said that after the SJM-cum-MGM extensions, there was no need to carry out two separate tenders, considering that all the current concession and sub-concession agreements with the government will expire at the same time in June 2022.
Leong said last month that he might consider a bid for the post of chief executive later this year.
Addressing Friday’s press conference, Leong did not say when the international public tender will be held.
Informed sources have told The Macau Post Daily that the tender would possibly take place in 2021.
The policy secretary also said that the future structure of the gaming industry would depend on the laws in force at that time. He said the government was consulting civil society on the matter.
According to the current law regulating the gaming industry, a maximum of three gaming concessions can be granted by the government. Concessions were granted to SJM, Galaxy and Wynn in February 2002. The government allowed Galaxy to issue a sub-concession to the Venetian in December 2002. SJM issued a sub-concession to MGM in April 2005, while Wynn issued a sub-concession to Melco in September 2006.
While SJM took over all the casinos owned by its “mother company” STDM in 2002 right away when the local gaming industry was liberalised, the Venetian and Galaxy only opened their first casinos in 2004, Wynn opened its first casino in 2006 and Melco and MGM opened their first ones in 2007.
Leong remained tight-lipped on whether all the six operators would be able to continue or newcomers would be allowed to enter the market. Leong said the issue had “a lot to do” with economic and financial stability and the security of Macau and the nation. He did not say whether the current arrangement of sub-concessions would continue or be abolished.
Any changes to the gaming industry law would have to be approved by the Legislative Assembly (AL).
SJM & MGM statements
SJM pointed out in a statement to the Hong Kong Stock Exchange on Friday that its revised concession agreement’s “new expiry date coincides with the expiry date of [the] other concessionaires so that all the original gaming concessions will expire at the same time.”
The SJM statement confirmed that SJM has paid the Macau government 200 million patacas as contract premium for the extension.
Moreover, according to the statement, SJM agreed to participate in the Non-mandatory Central Provident Fund within three months from the date of signing of the concession extension agreement.
The statement also pointed out that the agreement signed on Friday requires that SJM shall submit a bank guarantee of not less than 3.5 billion patacas to the Macau government within three months after signing the agreement “to warrant the fulfilment of an already existing commitment of labour liabilities after the expiry of the concession extension contract.” MGM’s bank guarantee amounts to 820 million patacas.
The statement underlined that, “as approved by the Macau government”, SJM on Friday signed a sub-concession extension contract with MGM Grand Paradise to extend its sub-concession from March 31, 2020 to June 26, 2022.
SJM Chairman Ambrose So Shu Fai was quoted as saying by the statement that his company “welcomes this extension and the reasonable terms set by the Macau government,” adding that “synchronising the expiration dates of all concessions and sub-concessions is very much in the interest of Macau and its tourism industry.”
MGM Grand Paradise said in a separate statement that “with the signing of the extension of our sub-concession, we will be able to continue our contributions to Macau with diversified art and entertainment experiences through seamlessly integrated technology.”
According to Gaming Inspection and Coordination Bureau (DICJ) data, SJM owned 22 of Macau’s 41 casinos at the end of last year. MGM owned two.(Macaunews)