Insiders forsee gloomy outlook following premium payments, closure of satellite casinos
The anticipated revival of the gaming sector is again receding into the distance: with no recovery expected for at least six months. Gaming insiders have admitted that the casino sector’s financial situation is set to worsen in the next six months, especially given that casinos have paid tens of millions to renew their concessions.
The insiders expressed concerns about possible additional financial pressure coming from the closure of at least seven satellite casinos in ZAPE and Taipa, as operators would have to pay the salaries of dealers in the closing casinos.
With the economic downturn and turmoil in the junket sector, casinos have seen steep falls in revenue, resulting in depleted cash flow.
This is on top of the ongoing pandemic, which has closed Macau’s borders except to arrivals from the mainland, Hong Kong and Taiwan.
However, outbreaks in the neighboring region are also preventing visitors from entering Macau given the SAR’s ‘zero-Covid’ strategy, which has led the government to require quarantine for arrivals from some high-risk mainland Chinese cities.
Previously, TDM Radio reported that it will cost gaming operators between MOP50 to MOP80 million to have their licenses extended for up to six months.
This comes after Secretary Lei Wai Nong announced that applications for extensions would remain open until December, since the licenses are due to expire on June 26 and the new gaming law has not yet been finalized.
In Sands China’s annual report released late last week, the gaming operator revealed that the “Macau government has invited Venetian Macao Limited (VML) to submit a formal request for an extension along with a commitment to pay the Macau government up to MOP47 million, and to provide a bank guarantee to secure the fulfillment of VML’s payment obligations towards its employees should VML be unsuccessful in tendering for a new concession contract after its sub-concession expires.”
Heeding this call, the request for extension was submitted on March 14.
However, with the ongoing gaming law amendment and renewal process, the gaming operator admitted that it is not excluding the possibility that the government could further “change or interpret the associated gaming laws in a manner that could negatively impact us.”
According to insiders contacted by Macao Daily News, at least seven satellite casinos located in the Z.A.P.E and Taipa are currently planning to halt operations in the middle of the year. Although the dealers in the satellite casinos are hired by casino operators, their salaries are paid by the satellite casinos.
However, if the satellite casinos cease operations, gaming operators would have to pay for their salaries – adding another burden to the sector.
Speaking to the Times, Ben Lee, managing partner of IGamiX Management & Consulting, said, “The operators actually have a valid [complaint]. The past two years have impacted their operations quite significantly, given their commitment to maintaining social stability by keeping on as many locals as they could and did.”
Although the six-month extension of gaming licenses came as no surprise to gaming operators, given the limited time remaining before the concessionaires expire on June 26, Lee said, “one would have perhaps expected some concession from the authorities.”
“There is after all a finite limit to the financial reserves of the operators,” he added.
Casino operators generated a total of MOP7.7 billion compared to the MOP6.34 billion amassed in January. However, this figure still represents a 69% decline from pre-pandemic levels.
