Casino operators pledge to help diversify Macau economy as new concession terms are agreed
The six licensed casino operators in Macau have revealed the terms of their new, 10-year gaming concessions granted by the special administrative region’s (SAR) government.
Under the agreements SJM Holdings, Galaxy Entertainment, Melco Resorts, MGM China, Sands China and Wynn Macau will each pay an annual fixed premium of MOP30m (€3.5m) and a variable premium related to the number of gaming tables and machines operated.
The variable premium will consist of MOP300,000 per VIP gaming table, MOP150,000 per mass gaming table and MOP1,000 per gaming machine on each operator’s premises.
The total variable premium for each operator may not fall under the amount required to operate at least 500 gaming tables and 1,000 electronic gaming machines.
Assuming all of those 500 gaming tables are mass tables rather than VIP, the figures suggest a minimum annual variable premium of MOP76m in addition to the MOP30m fixed premium.
Melco chairman and CEO Lawrence Ho: “Melco pledges its commitment to supporting the healthy and sustainable development of the tourism and leisure industry in Macau as we continue to work with the government over the next 10 years to contribute to the city’s development as a preeminent, global tourism destination.”
In addition, the concessions demand a special gaming tax payable at a rate of 35% of GGR, in addition to contributions of 2% of GGR to a public fund for the promotion, development and study of cultural, social, economic and other activities, as well as 3% towards a separate fund for urban development, touristic promotion and social security.
Furthermore, the operators have agreed to implement both gaming and non-gaming investment projects worth billions of Hong Kong dollars.
“On behalf of Melco, we are honoured and grateful for the Macau SAR government’s granting of the ten-year gaming concession to the company, and we are thankful for the government’s running of a smooth and transparent process,” said Melco’s chairman and CEO Lawrence Ho.
“Melco pledges its commitment to supporting the healthy and sustainable development of the tourism and leisure industry in Macau as we continue to work with the government over the next 10 years to contribute to the city’s development as a preeminent, global tourism destination.”
Market reactions to the details of the concessions suggest investors may have been hoping for more favourable terms for the operators.
Shares in all six firms fell by between 3.9% and 13.4% after the market opened today (19 December). Still, over the past month, shares in the operators are trading up significantly, as prices have increased between 15% and 80%.