- Sands China has been awarded a new 10 year gaming concession in Macau.
- Sands China is a subsidiary of Las Vegas Sands Corporation (NYSE: LVS).
- The Macau government is the final arbiter of gaming licenses for the Chinese special administrative area.
In most gaming jurisdictions, companies that receive licensing don’t really have to worry about their status in the future. Assuming that they continue to pay their bills, don’t cheat customers and otherwise operate above board it’s highly unlikely that they’ll ever get their licensing yanked arbitrarily. This is definitely how it operates in the US, even in crooked states like Connecticut and Massachusetts. Operate your property on the up-and-up, grease the right palms at the state and local level and you’re good.
This isn’t the case, however, in the Chinese special administrative area of Macau. This year saw all 41 of the area’s casinos up for renewal. They’ll have to do it again in ten years as the government has slashed the term of the licenses down to ten years. In 2002, the gaming licenses were awarded for twenty years. The licenses technically expired on June 26, 2022 but the major players in Macau’s gaming industry–Galaxy Entertainment, Melco Resorts & Entertainment, MGM China, Sands China, SJM Resorts, and Wynn Macau–were all granted an extension to December 31. Don’t think that the government is doing them a favor. The extensions cost each company Macanese pataca (MOP) 47 million, or $5.7 million USD.
For a long time, Macau’s gaming ecosystem was monopolized by the late Stanley Ho–known affectionately as the ‘godfather of gaming’ in the SAR–and his family. He retired at age 96 and passed away in Hong Kong in 2020 at 98. Ho owned and operated half of the properties in Macau, though they were always the subject of contentious conflict between him, his four wives and 14 surviving children. Like Biggie said ‘keep your family and your business completely separated’. Ho was a very interesting guy and his true role in Macau’s gaming industry was always shrouded in a degree of secrecy. Depending on who was telling the story, he was either involved with Chinese triads (organized crime) or else just someone who worked himself up from the bottom of the heap.
From a regulatory standpoint, Ho’s power kept a sort of stasis in the oversight of gaming in Macau. As his power waned before his death, that began to change. With no real majordomo among the current gaming operators and most of the casinos parent companies based in the US, the government is now looking to extract as much money as possible in return for the right to operate in Macau.
MACAU’S INCUMBENTS CAN BREATHE A SIGH OF RELIEF…FOR NOW
The aforementioned ‘major players’ have been awarded ‘provisional’ licenses to continue operating in Macau. The bidding for these licenses began in July following the most significant revision of Macau’s gaming regulations in decade. Among the ‘lucky winners’ was Las Vegas Sands–who continue to maintain their corporate headquarters in Southern Nevada despite not owning any gaming properties there. Their entire portfolio is now in Asia with five properties in Macau and the Marina Bay Sands in Singapore.
Some companies have been tight lipped about the bidding process and what it entails. For example, Wynn Resorts issued a terse, one paragraph press release:
Wynn Resorts (Nasdaq: WYNN) is pleased to announce that Wynn Resorts Macau received a provisional award of a gaming concession from the Macau government. The ultimate award of the gaming concession contract remains subject to the final documentation of its exact terms and conditions with the Macau government.
The Sands, meanwhile, were downright effusive in their press release announcing their new 10 year provisional concession. Most of the verbiage emphasized the ‘partnership’ between the company and the Macau government. The quote parade started with Robert G. Goldstein, the chairman and chief executive officer of Sands China Ltd. and its parent company Las Vegas Sands Corp:
“Our commitment to Macao has never wavered and we are honoured to continue the partnership we began with the government and people of Macao 20 years ago. In the coming decade and beyond, we will remain steadfast in our strategy of continuous investment in Macao – in its economy, its people and its community. Macao’s future as an international tourism destination remains bright and we look forward to furthering our leadership role in helping it reach its full potential.”
Goldstein then passed the mic to Dr. Wilfred Wong, president of Sands China Ltd, who continued to emphasize the same thematics established by the CEO:
“The entire company is elated at the news of our successful bid for a new 10-year gaming concession. We are grateful to each of our 25,000 team members for their tireless support and dedication. Our gratitude also goes to the tender committee for its meticulous and thoughtful consideration of the tender submissions. We will do our utmost to further contribute to Macao’s economic diversification and its continuing development into a world-class international tourism destination.”
He also gave some love to the government of the Macau SAR:
“Sands China is thankful for the guidance of the Macao SAR government over the past 20 years and looks forward to being part of this next exciting chapter in Macao’s history in the next decade and beyond. We are honoured to have the opportunity to continue contributing to Macao’s integration into the overall development of the nation, investing in non-gaming, and to helping strengthen and promote Macao as the ultimate destination for both leisure and business travellers.”
At least in the short term, the major players in Macau’s gaming industry can look forward to some semblance of business as usual.