Inside Asian Gaming

inside asian gaming August 2015 14 disappear and become concessions,” Macau gaming law expert Jorge Godinho says. “More concessionaires could be added, especially by upgrading to concessionaire status some current operators who are not concession holders.” That could include owners of satellite casinos that operate under license from SJM and Galaxy. Granting new concessions to those satellite casino operators could meet demands in Macau for a so-called “local champion.” Mr McKnight considers the notion of additional concessions “highly speculative,” but notes, “Over the past three years, several of our industry contacts have suggested the possibility of a ‘local licensee’ or a license owned by Macau citizens and/or employees.” Candidates for an upgrade to concessionaire status include Macau Legend, headed by former Macau legislator David Chow— his wife Melinda Chan now sits in the Legislative Assembly—which operates casinos at its Landmark Hotel and Fisherman’s Wharf complex; Paradise Entertainment, affiliated with Jay Chun’s LT Game, running casinos at the Macau Jockey Club, Hotel Waldo and Kam Pek Paradise; and junket promoter Jimei, which operates the casino at Grand Lapa Hotel as well as VIP rooms. BEAUTY CONTEST If there is a chance for additional casino concessions for new operators, despite Macau’s 14 straight months of declining gaming revenue, “this could generate quite a beauty contest,” Mr Godinho, Feature In Focus a visiting professor of gaming law and anti-money laundering at University of Macau, says. “There’d be no problem finding interested parties or capital. Macau has certainly proven itself and passed the ‘proof of concept’ stage,” Mr McKnight says. “In our view, there isn’t another gaming market in the world with the same potential long-term penetration and growth as Macau and China. Once market growth stabilizes, we believe there’s a case for long-term annual revenue growth of around 10%.” Potential new concessionaires may find the biggest limit isn’t the market but the availability of developable land President Xi Jinping’s anti-corruption campaign may not have targeted Macau, but it’s proven a powerful reminder of Beijing’s power over the city. On his visit to Macau in December, Mr Xi said Mr Chui’s government needs to improve its performance in his second term. Sources suggest Beijing has been disappointed with Macau’s execution of presumably mutual policies such as keeping gaming revenue expansion roughly in line with mainland economic growth, asserting more control over junkets, diversifying the economy, improving local infrastructure and avoiding social instability. If Macau can’t fix things, Beijing feels it must. “China is going to have a much stronger say in what happens in Macau, including the concessions,” a source says. “The problem is they don’t understand the place or the gaming industry.” That throws another wild card into Macau’s concession expiry deck. If there is a chance for additional casino concessions for new operators, despite Macau’s 14 straight months of declining gaming revenue, “this could generate quite a beauty contest,” Jorge Godinho, a visiting professor of gaming law and anti-money laundering at University of Macau, says.