A pedestrian walks across Avenida 24 de Junho on the Macau Peninsula
A gaming association is calling on the government to extend the current gaming concessionaires which are scheduled to expire in June 2022.
Speaking to the press during a seminar at the University of Macau, Lam Kai Kong, director of the General Association of Administrators and Promoters for the Macau Gaming Industry, said that despite the reopening of the borders, he expects gaming revenue will not recover before the gaming license concessions expire.
Guangdong province, home to a large share of Macau visitors, has been issuing visas to enter the SAR under the Individual Visit Scheme (IVS) since last Wednesday. Individual and group visas for all of mainland China will only be resumed from September 23.
However, analysts have previously expressed that despite the reopening of the city’s borders, consumer spending will be reduced and will not be on par with spending prior to Covid-19. The reissuing of the IVS will not be an assurance that spending power will be as high, at least in the remaining quarters of the year.
Lam then called on the government to extend the current concession period, without suggesting an exact timeline. He only said it should be extended for an “appropriate time.”
At the beginning of the second quarter of this year, brokerage J.P. Morgan Securities forecast that it would not be a surprise to see the renewal bidding process postponed by a year or so compared to the current expiry date of June 2022.
Aside from it being suspected that that the new concessions will come with a requirement for diversification written into the contracts, very little information has been provided by the government.
However, Chief Executive Ho Iat Seng made it clear during the Policy Address that none of the current concessions or sub-concessions would have their contracts automatically renewed in 2022. The city’s top official said that the public consultation process for the existing gaming law review, which will be organized as part of the legislation, will entail a long process and will not be concluded this year.
Moody’s Investors Service predicts that although there will be changes made to the existing agreements, “an outright rejection of concessions is very unlikely.”
Meanwhile, lawmaker Leong Sun Iok, who was also at the seminar, suggested that as the government prepares for the next tender, it should specify that gaming operators ought to have sufficient cash reserves.
Leong said that these companies should have enough funds to support their operations amid the economic downturn the city is experiencing due to Covid-19.
He also suggested that the authorities could make use of gaming taxes to establish a protection fund for gambling operators.
Macau has one of the highest gaming taxation rates in the world, with a direct tax rate of 35% and an effective tax rate of 39% on gross gaming revenue, including various levies.
In addition, Leong called on the government to formulate social responsibility indicators for the gaming operators, implying that these should be part of the scoring criteria during bidding.
No Comments