Inside Asian Gaming

INSIDE ASIAN GAMING | April 2010 6 G alaxy Entertainment Group and Las Vegas Sands Corp were expected between them to add at least 1,000 tables to the Macau gaming market within the next two years via new projects on Cotai. But in late March, local media sources reported Francis Tam, Macau’s Secretary for Economy and Finance, as saying a maximum of 500 new tables would be allowed in the Macau market between now and 2013. That appeared to be in contradiction to a previous statement from Fernando Chui, Macau’s recently installed Chief Executive, made in his maiden policy address earlier that month. At that time, Mr Chui said the government would honour the table and slot quotas assigned to under-construction or previously approved casino projects. At the time Inside Asian Gaming went to press, no official comment either clarifying or adding detail to Mr Tam’s statement was available from the government. It’s possible the 500-table figure quoted was either a misunderstanding or a miscalculation by the media of quota previously discussed with the industry. The absence of any clarifying statement from the government, however, tends to support the impression the Macau government is somehow sending a message to the market. Exactly what that message is, is not entirely clear. If Mr Tam’s announcement does amount to a substantive change of policy, then it’s likely to hurt Las Vegas Sands the most. Galaxy Macau, GEG’s Cotai project, is due to open in the first half of 2011. If Galaxy were granted the majority of the tables it seeks to have in the property on a ‘first come first served’ basis, it would gobble up the table quota for the entire Macau market before LVS’s Cotai plots five and six have a chance to open—possibly in the second half of 2011. Reasoning Galaxy has declined to comment and LVS has confined itself to a general statement from Steve Jacobs, President of Sands China. “We believe in the future of Macau and Sands China remains committed to working in partnership to help diversify the economy,”was about as far as Mr Jacobs was prepared to go. If Mr Tam’s statement were designed to address the issue of Macau’s overheating gaming market, it would certainly have some logic. In January and February, Macau’s gross gaming revenue (GGR) increased by an average of 66% year-on-year. GGR in the first three weeks of March alone was around 13 billion patacas (US$1.63 billion), according to unofficial sources. That consistent, red hot performance led to speculation among analysts that the central government in Beijing would seek some kind of cooling measures in the form of visa restrictions and/or curbs on China’s domestic credit markets. As it stands, however, Mr Tam’s announcement appears potentially to be penalising new projects rather than spreading a little pain equally across the market by requesting closure of tables in existing venues. The lop-sided nature of Mr Tam’s policy announcement—if that’s what it was, and not a misunderstanding or a miscalculation of the numbers—raises the question ‘Why?’ Background noise In the absence of clear guidance from the Macau government on the table allocation issue as it applies to Cotai five and six, the temptation to speculate is strong. It Smile Please Behind the mask of government-operator relations in Macau Macau Policy