There has been much speculation as to if Asia’s Las Vegas of the East, Macau, would boot one of the three American gaming companies that have built their empires on the Chinese peninsula. We now have the answer.
The Chinese government has put a veritable stranglehold on Macau’s economy due to their Zero-Covid restrictions. The policy has sent a chill throughout the once-thriving gambling mecca as the six casino operators, three of which are American, struggle through these dark days.
However, that didn’t preclude any of those companies from seeking a 10-year renewal to their licenses, banking on the relaxation, and ultimately the rescission, of those draconian government measures.
Yet, this time around it was different as there was a new rival to the American triumvirate of MGM China Holdings Ltd., Sands China Ltd., and Wynn Macau Ltd., as GMM Ltd. –an entity linked to the Malaysian-based gaming giant, the Genting Group– attempted to muscle its way into the Macau gaming scene.
It was thought that GMM would have a better-than-average shot at ousting one of the American companies due to the fractious geo-political relationship with the United States. However, when the decision was made, the three American companies were welcomed back into the fold, as were the three Chinese companies, with GMM coming up short.
Macau’s New Look
Although the casino operators are happy to hear that the status quo has not been upset, they also understand the halcyon days of Macau dwarfing Las Vegas in gaming revenue appears to be gone for good.
The Chinese government has not only severely limited the traffic due to their Covid policies, but has also cracked down on gambling junkets that were whisking high rollers from the Chinese mainland to the tiny enclave that has been command central for Far East gambling.
The Mainland Expects Macau to Branch Out
The mainland government has made it clear that it wants Macau to diversify into other economic sectors and shed its overwhelming reliance, up to 80%, on casino gambling. But the landscape is shifting, and the gaming licenses that were once so coveted will not be nearly as valuable.
Secretary for Administration and Justice, Cheong Weng Chon, said at the press conference to announce the issuance of the licenses, “The operation and development of our gaming industry has come to a certain scale today, but there are also some problems. For example, the source of our tourists is too concentrated. It’s not healthy.”
In July, the casino halls fell virtually silent as travel visas came to a halt and Covid restrictions eliminated the vast majority of its citizens from venturing outside. Casino revenue dropped to $49 million, down a whopping 98% from pre-Covid numbers.
And while the final details on the new licenses have not been disclosed, it has been reported that the six gaming companies will be ordered to comply with the shifting landscape in Macau by ensuring that the employment of the locals is protected and that money will be earmarked for non-gaming tourism as well as cultural events.