Macau Government Plans to Set Annual Revenue Targets for Casinos
New gaming law changes in Macau could see operators required to hit a certain revenue target or risk losing electronic and table games.
In Macau, government officials have been steadily working on legal changes involving the gambling industry. We know that there will still be six casino concessionaires, so all current operators should be able to pick up licensing again in July when the current license period expires. However, operators will be limited to 10 years instead of the original 20 years as before. Now we have learned that the gaming law may also include an amendment where operators must hit a certain revenue mark or risk losing electronic gaming machines or table games.
Legal Details of the Framework Changes
Known as Amendment to Law No. 16/2001, the changes will see each operator capped on how many gaming machines and tables it can operate. An annual limit for gross income will also be set for each machine. This number is supposed to be set based on gross gaming revenues.
If an operator does not meet the minimum annual requirement, the difference must be made up. If it is not met for two years in a row, then the number of games offered could be decreased to a lower number.
Sands China was asked about this new change and the company does not seem too concerned. During its fourth quarter earnings call, the company’s COO and Executive Director Grant Chum stated that it welcomes a linking between table game allocation and productivity. Chum said the company always uses their allocation efficiently.
Hotel Booking Remains Low Plus COVID Concerns
While the Sands China does not seem to be concerned about the stipulation, it may become a problem for some operators. Right now, Macau is suffering from low visitor numbers due to continued COVID-19 travel restrictions. Because people cannot easily travel to the SAR, there are fewer travelers to book hotel rooms and spend money playing the casino games.
Just this week, it was reported that several luxury hotels connected to casinos in Macau have rooms available each night for the upcoming Chinese New Year. This is a major concern as it shows that people are not traveling to the region for one reason or another.
Usually, the Chinese New Year is a busy time for Macau, as people travel from around the world to enjoy the festive holiday period. What is the reasoning behind the lower numbers? Are people scared to travel due to COVID-19 or unable to travel due to the restrictions in place?
Is this an indication of things to come? Macau receives a good deal of business from nearby Hong Kong and mainland China. Issues have been ongoing with travel restrictions connected to these areas as COVID-19 is still an issue.
Until the travel restrictions are lifted, the casinos and hotels in Macau may still report lower numbers. It does not appear that COVID is going away any time soon, so will new concessions be made in the future? Will travel open back up again?
If Macau cannot see its travel numbers return to pre-pandemic levels, the number of games offered by some providers may be lowered based on the potential new regulation. Without visitors, revenue numbers will continue to be decreased. Will the new regulation keep COVID in mind when determining the revenue projections that must be hit?
We shall see in the coming days and weeks as to how this develops and if Macau operators will be negatively impacted by the outcome.