What’s going on inside the Macau government? Galaxy 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.
Now, Francis Tam, Macau’s Secretary for Economy and Finance has announced a 500-table cap on the market between now and 2013. Given that the government has previously stated it will honour agreements on casinos already being built or planned, does Mr Tam’s cap announcement mean clawing back table quota previously agreed in principle with the operators? Have the operators been Shanghaied or have negotiations been going on behind the scenes in advance of the announcement? AGI suspects the latter, but it’s rather important to know in order for investors to get an understanding of regulatory risk and the trajectory of that market.
At the moment the operators aren’t talking, other than to make pretty general statements. “We believe in the future of Macau and Sands China remains committed to working in partnership to help diversify the economy,” was as far as Steve Jacobs, President of Sands China, would go earlier today in comments to Dow Jones newswires.
GEG’s flagship project Galaxy Macau alone–due to open in the first half of 2011–was expected to have 600 tables. LVS’s previously suspended plots five and six were anticipated as adding hundreds more by around the same time. An obvious question is what effect, if any, a possible claw back on table quota will have on the business plans for the Galaxy and LVS projects.
In February, Macau’s gross gaming revenue increased 69% year on year, beating even January’s spectacular growth, and leading 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.
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