Satellite casino advocates management fee as new law looms

Neha Soni January 29, 2025
Satellite casino advocates management fee as new law looms

As the 2025 deadline for Macau’s satellite casinos to adapt to the new gaming laws looms closer, operators are increasingly concerned about the future of their businesses. Some operators have 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.

With only 11 months remaining of the grace period, a satellite casino operator, whose identity was not disclosed, made this suggestion in the comments to Macau Daily News. The operator also noted that they have yet to receive any update about the future of satellite casinos or how management fees will be calculated.

Satellite casinos in Macau operate under the license of a larger gaming concessionaire but are independently managed and promoted by third-party entities. They rely on their larger counterparts for operational and regulatory support while running their day-to-day business.

The new gaming law, which took effect in 2022, introduced significant changes to the operation of satellite casinos. Under the law, these casinos will no longer be allowed to share gaming revenue with concessionaires. They will be receiving a management fee instead.

The law provided a three-year transitional period to satellite casinos to adapt to the new management company model. This grace period expires in 2025.

“Gaming concessionaires are likely taking a wait-and-see approach, waiting for the government to provide updated guidance before making any decisions,” the operator was quoted as saying. “The stance of concessionaires on management fees is critical and could determine whether satellite casinos survive or shut down.”

Management fee structure unfeasible: Operator

Deeming the uniform management fee structure unfeasible, the operator cited diverse financial circumstances of such operators. The operator said these include varying monthly win rates, personnel costs, operating expenses and loan obligations.

“Using the average win rate of a satellite casino over the past six months as the basis for setting management fees could be a viable solution,” the operator suggested. “This would strike a balance between the interests of gaming concessionaires and satellite casinos.”

The operator urged the Macau government to step in and mediate the discussions. “With just 11 months left until the end of the grace period, [we] hope the government will take the initiative to coordinate and help resolve this issue. This would balance the interests of concessionaires and satellite casinos, enabling a seamless transition by the end of the year.”

The operator added, “Satellite casinos can then continue to make contributions to Macau’s gaming industry and its tax revenue.”

At the start of 2023, Macau had 11 satellite casinos in operation, down from 18 before the enforcement of the revised gaming law in 2022. Nine of the total satellite casinos operate under the concession of SJM Holdings. This marked a 40 percent decline in their numbers, attributed to operators exiting the market due to increased regulatory demands and the requirement for concessionaire ownership.

In November, Jay Chun, chairman of the Macau Gaming Equipment Manufacturers Association, said that no formal discussions have been initiated about the future of satellite casinos. In an interview to Macau Business in November 2024, Chun expressed hope that the (then) upcoming government will initiate discussions. He also noted that a key part of the discussions would be how management fees are calculated.

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