The Co-Chairman and non-executive director of Macau Legend Development Ltd, David Chow, has called on the Macau SAR Government to support the gaming industry first and development other enterprises second or risk a “domino effect” as operators struggle to repay growing debts.
His comments follow a report by Inside Asian Gaming earlier this week which revealed Macau’s six concessionaires are on track to reach combined debts of US$25 billion by the end of 2022.
In an interview with Macao Daily News, Chow said the city’s satellite casinos have their own loans totaling around MOP$20 billion (US$2.5 billion) and warned that failure to support the industry could cause a financial crisis.
“The banks will definitely pursue their debts, which will create a domino effect,” he said.
While Macau’s satellite casinos appear to have been given a reprieve, with the government reversing a previous change that would have required all casinos to operate within premises owned by a concessionaire, Chow has also called for a continuation of revenue share agreements in future. This is after the President of the Second Standing Committee of the Macau Legislative Assembly (AL), Andrew Chan Chak Mo, revealed satellite operators will no longer be allowed to participate in revenue share arrangements with concessionaires, instead relying on management fees only. The restriction on revenue share arrangements is planned to come into effect after the expiration of a grace period of three years from the date the new Macau gaming law comes into effect.
According to Chow, these management fees should still be somewhat based on GGR – arguably a form of rev share.
“Management contracts all over the world are positioned so that the management fee pricing targets fluctuate according to good and bad gaming revenues,” he said.
“I personally think there is a technical problem if the management fee is not based on gaming revenue.”
Macau Legend operates the Legend Palace and Babylon casinos in the Macau Fisherman’s Wharf precinct under the license of SJM Resorts.