Macau Set to Finalize Casino Concessions Ahead of Expiry

Macau authorities are looking to open the bidding process for new casino licenses prior to the expiration of the current gambling permits, suggested notes from JP Morgan Securities (Asia Pacific), Morgan Stanley, and Sanford C. Bernstein.

JP Morgan Securities

On Thursday, the government of the Special Administrative Region (SAR) of China released its summary report on the public consultation it had opened related to the proposed changes to the regulatory environment.

The consultation period that concluded in October provided the government with six months to produce a report on the consultation findings, but the report was published well ahead of the pre-defined timeline, suggesting authorities might be in a position to speed up the public tender process.

Speeding up the process is a sign of the government’s strong desire to conduct the license re-tendering before the expiry, according to analysts at the investment bank. Based on the current speed of events, JP Morgan stated that the license re-tendering process in the form of public bidding could start anytime within the first six months of 2022 and that even new license issuing could take place before the current licenses expire in June 2022.

JP Morgan also considered the public opinion expressed in the consultations related to the number of casino licenses, noting that the majority, 44% of the 217 opinions, wanted the number to remain unchanged at 6, while 16.6% of the respondents requested that number to be increased. Nearly 30% chose to express no opinion on the subject or remain neutral.

Based on the government’s wording in the report, JP Morgan believes the number of casino licenses would remain unchanged as the government would seek to balance the stability of the economy within a healthy development framework of the gaming industry.

Morgan Stanley

A day before the JP Morgan memo, on Thursday, Morgan Stanley also released a memo on the subject, expressing its opinion that the public consultation period revealed clarity on the key discussion points such as the number of operators, the duration of the license taxation, and dividend.

“We see status quo on the number of licenses (six), duration (between 10 to 20 years), tax (same as before), and dividend (allowed),” Morgan Stanley analysts concluded in the memo.

Morgan Stanley also paid attention to two other elements of the consultation report: the public support for “increased oversight on operation” of the gambling industry and the overwhelming support that the city should continue to develop the casino sector in the non-gaming direction, considering it “return dilutive” for the gambling industry.

Sanford C. Bernstein

Analysts at Sanford C. Bernstein brokerage also concluded in their Thursday memo that the government looked determined to finalize the new concessions “prior to the June expirations,” while also pointing out that the report did not raise any issues.