MACAU 3.0: Concession contracts signed and investment plans revealed sees renewed optimism for the decade ahead

It’s been a huge weekend for the Macau gaming industry.

It all started on Friday afternoon at 4:15pm at Government House when the six concession contracts were signed.

Chief Executive Ho Iat Seng signed on behalf of the government. He was accompanied at the ceremony by Secretary for Administration and Justice Andre Cheong Weng Chon and Secretary for Economy and Finance Lei Wai Nong. The six concessionaires signed in the order in which they had placed in the tender bidding results: MGM, Galaxy, Sands, Melco, Wynn and SJM.

This was followed by a government press conference, still at Government House, at 5:30pm during which the government revealed the total investment committed by the six companies during the tender process was MOP$118.8 billion (US$14.9 billion), with MOP$108.7 billion (US$13.6 billion) for developing foreign source markets and non-gaming and MOP$10.1 billion (US$1.26 billion) for gaming projects.

The precise text of the six concession contracts was also published on Friday in the second supplement of issue number 50 of Series II of the Macau Government Gazette. The contracts run no less the 288 pages in total, so IAG is still poring over them. We’ll likely publish more explanation of the contracts in the coming days.

The action then moved to Macau’s World Trade Centre on Saturday morning, in which press conferences were held at 10am (for MGM, Galaxy and Sands) and 11:30am (for Melco, Wynn and SJM). One by one, each of the six concessionaires were allowed two representatives to explain their investment plans and field questions from the media. Each of the six concessionaires then issued press releases offering more detail on the investment plans.

IAG has spent the weekend analysing the investment commitments of the concessionaires, the concession contracts and speaking with the concessionaires about their plans for the next decade. We have a host of information for you to enjoy:

News

Commentary

Investment commitments

The events of this weekend represent the culmination of arguably the most consequential year ever for the gaming industry in Macau, involving major changes to the Macau gaming law and an intense public re-tender process, setting the scene for the next decade.

The six Macau casino concessionaires and the investment and banking community that has so much invested in them can all breathe a collective sigh of relief. Since the winning bidders were announced all six of the concessionaires have seen substantial rebounds in their stock prices.

This removal of the concession renewal risk and the Friday morning morning removal of mandatory hotel quarantine for Macau arrivals are two massive shots in the arm for the Macau gaming industry.

But now it is time to look ahead to build a new Macau from 1 January 2023. Two fundamental problems persist: strict enforcement of capital controls from the mainland, and the underlying posture of the mainland towards casino gaming in Macau.

Those problems can be addressed by a fundamental shift towards an essentially mass market only strategy, a significant increase in hotel room supply to support that strategy, becoming a destination for people from all across Asia and even the entire world rather than just China, and finally a paradigm shift in the way the SAR operates – thus convincing Beijing that the Macau economy is meeting the expectations of the central government.

If Macau can do all this, it will thrive once more.