Skip to main content

Macau’s Gaming Association Insists on Casino Concessions’ Validity Extension

The General Association of Administrators and Promoters for the Macau Gaming Industry requested an extension of the current gaming concessions from the government of the special administrative region. The validity of the concessions expires in June of 2022.

During a press conference held at the University of Macau, the gaming association’s director, Mr. Lam Kai Kong, expressed the grim opinion that the administrative region’s gambling revenue is unlikely to recover before the expiry of the license concessions. The association’s head is skeptical about the recovery despite the fact Macau has already reopened its borders to tourists.

Many of the tourists visiting Macau arrive from the Chinese province of Guangdong, which commenced issuing visas under the Individual Visit Scheme (IVS) last Wednesday. September 23 will see the resumption of group and individual visas’ issuance for mainland China. Despite this, industry experts and analysts believe there will be a drop in the consumer spending rates regardless of the reopening of Macau’s borders.

The spending will hardly return to its pre-coronavirus rates, the analysts think. According to them, the resumption of the IVS would not be sufficient to restore the tourist spending to its previous levels, or at least not within the remaining months of the year. The head of the Macau Gaming Association then insisted that the administrative region’s authorities should extend the concessions’ validity period. However, the director did not mention a specific timeframe.

Mr. Lam Kai Kong’s suggestion hardly comes as a surprise. At the start of 2020’s second quarter, the US investment bank and broker J. P. Morgan predicted a likely delay in the bidding process’ renewal. According to the investment bank, the concessions’ expiry could be postponed by one year, counted from the original date of 2022. The Macau government is yet to release detailed information about the new concessions although there have been suspicions the contracts would require diversification.

Gaming Contracts Not to Be Renewed Automatically

Ho Iat Seng, the administrative region’s current Chief Executive, has indicated the existing gaming contracts will not be renewed automatically upon expiring in 2022. In his words, the consultation process for the concessions is unlikely to be concluded soon. The bond credit rating firm Moody’s Investors Service forecasts that changes would certainly be made to the existing contracts. However, it is highly unlikely for the concessions to be rejected, according to Moody’s.

Lawmakers who attended the public seminar are also of the opinion that the Macau government would expect the gaming companies to have enough cash reserves, allowing them to continue operations despite the revenue drop during the coronavirus pandemic. Legislator Leong Sun Iok believes the Macau government might use gambling taxes to create a protection fund for the struggling casino operators.

The special administrative region boasts some of the largest gambling taxes on a global scale. The Macau government imposes a 35% direct tax rate along with a 39% effective tax rate on the operators’ GGR (Gross Gaming Revenue). According to legislator Leong, Macau’s authorities should outline social responsibility indicators for the local casino operators to adopt. Said indicators should be incorporated into the concession bidding process, the lawmaker stressed.

 Author: Harrison Young

Harrison Young is an experienced writer, who started his career almost 8 years ago. Prior to joining our team at CasinoGamesPro, he worked as an editor for a small magazine.