Monday, February 26, 2024

Macau’s bidding process expected to begin in August; Melco confirms 6-month subconcession extension for Studio City | Yogonet International

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After Macau lawmakers approved the new gaming law Tuesday allowing six licenses for 10-year periods, brokerage JP Morgan said in a note that they expect the new public tender for Macau’s gaming licenses to commence in late July or August, basing its expectations on the timeline of 2001. Furthermore, they stated that the result of the tender process may be announced by November. 

In the note, analysts DS Kim and Livy Lyu remarked: “We recall, for the original concession 20 years ago, that public bidding kicked off around 40 days after the [original] law was passed and lasted for about three months.”

Based on this, we expect the bidding to kick off in August (or late July), the result of which could be announced by early November,” the analysts said, as reported by Macau Daily Times.

The approval of the gaming law amendment will pave the way for new casino licenses to be issued following the expiry of the current ones in December after an extension from the original termination date of June 26.

In addition, Studio City International Holdings Limited, an integrated resort located in Cotai, Macau, announced Thursday that Melco Resorts Limited, a subsidiary of Melco Resorts & Entertainment Limited and the operator of the Studio City Casino, entered into an amendment agreement to its sub-concession contract pursuant to which the gaming operator’s sub-concession, which is due to expire on June 26, 2022, was extended to December 31, 2022.

Studio City Casino also said Thursday that, along with Studio City Developments Limited —the subsidiary of the company holding the land lease rights for the property on which Studio City Casino is located—, they have committed to signing the documents required by the Macau government so that the gaming areas and gaming support areas of the Studio City Casino, in accordance with Macau law, revert to the Macau SAR, without compensation and free and clear from any charges or encumbrances at the expiration of the gaming operator’s sub-concession.

The Gaming Operator and Studio City Entertainment Limited have also amended the agreement under which the gaming operator operates the Studio City Casino to align it with the newly enacted amendments to the gaming law in Macau.

Earlier this week, the Official Gazette published that the new gaming law will come into effect on Thursday amid the continuing tourism drought that is causing the casinos to lose millions of dollars every day.

Amendments to the Macau SAR’s Gaming Law No. 16/2001 will give the Chief Executive the power to terminate a gaming license without judicial procedures if a casino operator infringes upon national security or fails to meet the duties of a concessionaire such as paying taxes on time, with the holder having to return its gaming area/ capacity to the government without compensation.

Under the new legislation, the number of new licenses is limited to six, and the new permits will be given out for up to 10 years, down from the current 20 years.

The approval of the new law also comes amid a fresh outbreak of Covid-19 that is bringing the city to a standstill triggering casino stocks to fall by as much as 3.38% earlier this week. For eight months, Macau has recorded zero Covid-19 cases in the local community.

Over the past two months, the battered industry has suffered a slump in revenue. In April it recorded its worst losses in 18 months, with gross gaming revenue (GGR) reaching only MOP2.68 billion ($331,5 million) as Macau endured stricter border restrictions whenever fresh outbreaks arose in neighboring regions.

Subsequently, in May, GGR dropped to MOP3.34 billion ($413,2 million) the second worse figure since travel resumed for visitors from mainland China in September 2020.

According to JPMorgan Chase & Co analysts, including DS Kim, Macau’s GGR may hit “near-zero levels” for at least a few weeks until the situation is under control.


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