Wynn Resorts, MGM and Las Vegas Sands have operations extended in the Chinese gambling hub
by Elaine Yu and Katherine Sayre, The Wall Street Journal, November 26, 2022
HONG KONG—Six casino operators in Macau won provisional licenses to continue operating in the Chinese gambling hub for the next 10 years, the local government said, while rejecting a bid from an outsider to enter the market.
The winning companies include affiliates of three American casino giants, Las Vegas Sands Corp., MGM Resorts International and Wynn Resorts Ltd. The licenses of three local rivals were also renewed. They are held by Galaxy Entertainment Group, SJM Holdings Ltd. and Melco Resorts & Entertainment Ltd.
The 10-year licenses begin in January under a new gambling law that also imposes more government oversight over casino operations in Macau.
The companies’ plans have met the Macau government’s requirements, including ensuring local employment, attracting foreign tourists and expanding their non-gambling offerings, Cheong Weng Chon, the city’s secretary for administration and justice, said Saturday.
The casino market has become a key source of revenue for the American companies over the past 20 years, despite seeing revenues decline amid China’s strict zero-Covid policies over the past few years.
During the pandemic, Macau lost its crown to Las Vegas as the world’s most lucrative gambling center. Casinos on the Las Vegas Strip generated more than a billion dollars a month in gambling revenues for 19 months in a row, eclipsing Macau’s tallies, which fell to a record low of $49 million in July during a citywide lockdown.
Analysts had largely expected the current operators’ licenses to be renewed. In September, a company affiliated with Malaysia-based Genting Group made a last-minute surprise bid for one of the six licenses, bringing the number of competitors to seven. In the end, the government maintained the status quo.
Mr. Cheong said Macau needed to open up more to tourists globally because the makeup of its tourism market was too uniform and unhealthy. Macau, the only place in China where casino gambling is legal, has long relied heavily on visitors from the mainland. China’s stringent travel restrictions in recent years have squeezed off this vital stream and battered the industry. Beijing’s crackdown on corruption also crimped Macau’s VIP market in previous years.
Mainland visitors to Macau in the first half of this year fell 78% from the same period in 2019, while gross gambling revenue fell 82%, government figures show.
Lei Wai Nong, the city’s secretary for economy and finance, said the government’s top priority was to ensure stable employment for gambling industry workers, which the casinos have promised to do.
MGM was the top scorer during the bidding process, the government said. Sands and Wynn were ranked third and fifth, while SJM scored the lowest.
Wynn said the ultimate contract remains subject to the final terms and conditions with the Macau government. MGM and Sands didn’t immediately respond to a request for comment.
The casino operators built Macau into the world’s biggest gambling hub after receiving licenses about two decades ago. The companies spent billions of dollars developing mega-casinos that attracted throngs of visitors from mainland China, surpassing the Las Vegas Strip in gambling revenues.
Earlier this year, Macau overhauled its gambling rules to increase regulatory oversight over casino companies, in an effort to ensure they have sufficient financial resources and more closely align their operations with China’s national security interests.
The city’s gambling business and especially its junket system—tasked with recruiting high-rollers and lending and collecting money—has been associated by officials in Beijing with corruption and capital outflows. Macau’s top junket boss, Alvin Chau, and 20 other defendants are currently facing charges related to alleged criminal association, illegal gambling, fraud and money laundering. He was arrested last November and remains in detention.