Macau satellite casino operator Macau Legend Development Ltd says it will no longer participate in the VIP gaming promotion business after terminating a long-running agreement with New Legend VIP Club Ltd.
Although Macau Legend was not allowed to directly participate in the promotion of VIP gaming under Macau’s previous law, it was able to indirectly participate by way of a variable-interest-entity (VIE) agreement first signed with New Legend in 2014.
Under the agreement, New Legend was paid 42% of the revenue generated via its VIP gaming rooms at Macau Legend’s Babylon and Legend Palace casinos.
In a filing, Macau Legend explained, “With the recent developments of the gaming promotion industry, there has been a significant impact on the VIP gaming promotion business. Further, the Macau Government has passed the new gaming law on 21 June 2022 which served to provide new regulations and guidelines for the development of the Macau gaming industry, including satellite casinos, which will affect the operations of Hong Hock as a casino service provider.
“In light of the above, the board of directors of the Company wishes to announce that the Company has ceased its VIP gaming promotion business upon expiration of the term of the Service Agreement on 31 December 2022. “Upon the expiration and termination of the Service Agreement, the Exclusive Management and Consultancy Services Agreement and the Exclusive Undertaking to Sell Agreement were automatically terminated in accordance with the terms thereunder. In view of this, on 31 December 2022, the parties to the VIE Agreements terminated the VIE Agreements with immediate effect from 1 January 2023.”
Macau Legend recently warned of material uncertainties around its ability to continue operating amid mounting losses throughout the COVID-19 pandemic, although it has also expressed a desire to continue managing casinos under the license of SJM – despite changes to how satellite casinos are governed under Macau’s new gaming law.
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