The results are in
The Macau government has issued its proposals on changes to its gaming law, with national security supposedly a top priority.
Nikkei Asia correspondent Pak Yiu took to Twitter to share the key takeouts from the proposal announced by Macau’s Executive Committee on Friday:
Authorities in the Chinese territory had already mooted their intention to increase national oversight, which set alarm bells ringing for foreign shareholders and sent shares tumbling. Yesterday’s proposed changes by the Committee, however, should go some way in settling the nerves of overseas investors.
limiting the maximum number of concessions to six
One such change would see officials increase the shareholding requirement for Macau-based managing directors by 5% to 15%. The proposal also sets out rules regarding the market’s casino licenses, including limiting the maximum number of concessions to six, with each license’s length capped at ten years, and no subcommissions.
Bernstein analysts, meanwhile, are predicting a rosy 2023 for the global gambling mecca with EBITDA set to recover to pre-COVID-19 levels.
Re-tendering exercise
The licenses of all six casino operators in Macau will expire on June 26, but Friday’s news suggests the six current concessionaires will secure new licenses once the officials finalize the re-tendering exercise.
According to Inside Asian Gaming, however, no fresh information was forthcoming on whether re-tendering will occur in 2022, or if authorities will grant the current concessionaires an extension.
Another notable change to the gaming bill includes raising the minimum share capital of gaming concessionaires from MOP$200m (US$24.94m) to MOP$5bn (US$623m). The current tax rate, which is effectively 40% of gross gambling revenue (GGR), will remain the same.
The proposed changes follow a 45-day consultation period, with the new guidelines to go before the Legislative Assembly for consideration
Rosy tips for the future
A day prior to Committee’s proposed changes, Bernstein analyst Vitaly Umansky’s crystal ball predicted a robust upturn for Macau’s gambling industry in the coming months and years, driven by a healthy rebound in visitation and spend on the back of capacity increase.
mass market revenue for 2023 will rise 15% on pre-COVID figures
According to IAG, the analyst has forecasted that GGR will reach 81% of 2019 figures in 2023. Umansky also predicts mass market revenue for 2023 will rise 15% on pre-COVID figures, partially offsetting long-term weakness in the VIP sector, which he forecasts to reach just 28% of 2019 levels.
The good news for 2022, according to Bernstein, is that EBITDA is forecasted to hit 37% of 2019 levels, representing a 270% improvement over 2021. While the analyst forecasts GGR will rise 47% year-on-year in 2022, it will supposedly reach just 44% of 2019 levels. Umansky expects mass market revenue to reach 66% of 2019 figures, with VIP at only 9%.