Clock's ticking on Macau satellite casinos as concession talks stall
With only eight months left in a government-imposed transition period, the fate of 11 satellite casinos remains uncertain. Satellite casinos have resurfaced with concern that gaming concessionaires or the government have not begun discussions about their future.
The argument is that delaying discussions about their future puts them at a significant disadvantage as time continues to count down. According to local media, some operators have suggested that the government should not return all gaming tables to concessionaires if satellite casinos shut down. They are asking the government to use the gaming tables as a bargaining chip between concessionaires and authorities.
A more active role in discussion
The operators hope this would help put them in a more active role in the discussion that is primarily to be held between the concessionaires and the government. Satellite casino operators are hoping that some still be allowed to continue operating in Macau, based on their gaming table relocation policies.
Currently, Macau has 11 satellite casinos in operation with approximately 450 gaming tables. Majority of these, which is nine of the total satellite casinos operate under the concession of SJM Holdings. The government has set a cap of 6,000 gaming tables and 12,000 gaming machines through the Chief Executive’s directive. Of the total, SJM was allocated 1,250 tables, Galaxy Entertainment Group 1,000 tables, Melco Resorts 750 tables, Wynn Resorts 570 tables, MGM 750 tables, and Sands China 1,680 tables.
A few weeks ago, Franco Liu, a Macau-based property valuation expert warned the closure of satellite casinos could lead to severe property devaluation and financial instability. Predictions are that some hotel properties could lose more than 60 percent of their value, according to Liu. Hotels with satellite casinos have a history of securing larger loans due to their higher valuations. However, with the looming deadline and closures, Liu has warned that devaluations would render many of these loans unsustainable. This would also greatly impact banks with significant exposure to the sector.
What has happened so far?
Satellite casinos are run by third-party businesses but operate under the licenses of major casino companies. Implemented in early 2023, the new regulations have made their future uncertain. The new rules aim to increase government oversight, but many satellite casino operators are struggling to understand how to follow them.
So far, neither the Macau government nor the six major gaming companies have discussed the upcoming changes with satellite casino operators or explained how management fees will work. This lack of clarity has caused concern, leading casino employees to seek help from lawmaker Lei Leong Wong.
Executives from Macau’s satellite casinos have long tried to urge discussions with the government and concessionaires but failed. Some operators have also proposed tying future management fees to their average win rate over the past six months as the end of a three-year transitional period nears to no avail as discussions did not materialise.
