Macau’s six concessionaires will each pay the government a base sum of MOP$750 per square meter of gaming space for the first three years of their new 10-year concessions and MOP$2,500 per square meter for the remaining seven in order to “rent” back the casinos at their respective integrated resorts. In years 2 and 3 the MOP$750 base will be increased in accordance with the Macau average price index, and in years 5 to 10 the MOP$2,500 year 4 base will be similarly indexed.
The “utilization fee” as it is referred to by SJM Resorts comes after the casino areas of the concessionaires’ properties were reverted back to the Macau SAR Government upon expiration of their previous 20-year concessions on 31 December 2022.
The new 10-year concessions came into effect as of 1 January 2023, with five of the six concessionaires – Galaxy Entertainment Group being the exception – confirming via Hong Kong Stock Exchange filings or press releases that they have reached agreements with the government to rent back the casino areas within the integrated resorts they operate for the next 10 years. Galaxy Entertainment Group has confirmed directly to IAG that their fees payable are the same as the other five concessionaires.
The fee will be paid as an annual amount in March each year.
SJM said in a Friday filing that its annual utilization fee, which accounts for the use of casino areas at Casino Grand Lisboa, Casino Grand Lisboa Palace, Casino Lisboa and Casino Oceanus at Jai-Alai, will amount to MOP$69 million (US$8.6 million) in year 1 (2023), rising to MOP$229.3 million (US$28.7 million) in year 4 (2026). Years 2, 3 and 5 to 10 will be indexed as explained above.
Melco also announced that it had reverted and agreed to rent back casino areas totalling 31,227.3 square meters at City of Dreams Macau, 28,784.3 square meters at Studio City and 17,128.8 square meters at Altira, implying an annual fee of MOP$57.9 million (US$7.2 million) for the first year of its new concession, rising to MOP$192.9 million (US$24.1 million) from the fourth year, with indexation as explained above.
“We are honored and thankful to be awarded a 10-year gaming concession by the Macau SAR government,” said Melco Chairman and CEO, Lawrence Ho.
“The company is grateful for the Central government’s leadership and guidance in supporting Macau’s continued integration with mainland China. We pledge our full support to the sustainable and diversified development of the tourism and leisure industry in Macau, and will continue to work with the government, the community and stakeholders to benefit and contribute to the city’s development as a key global tourism destination.”
The utilization fee will be yet another substantial new revenue stream for the government, to be added to other payments to the government the concessionaires are liable for under their concession contracts.
Concessionaires must pay a special gaming tax of 35% of gross gaming revenue and a further 5% of gross gaming revenue in contributions for various forms of Macau CSR. If Macau GGR was to total MOP$130 billion in 2023, as is estimated by the government, the total GGR based taxes and charges payable this year by Macau’s six concessionaires would be MOP$52 billion (US$6.5 billion).
Additionally, concessionaires must pay an annual fixed premium of MOP$30 million and annual variable premiums of MOP$300,000 per VIP table, MOP$150,000 per mass table and MOP$1,000 per slot machine. Assuming only 10% of gaming tables are set aside for VIP play, the total annual premium payable by Macau’s six concessionaires to the government would be MOP$1.182 billion (US$148 million).
CASINO UTILIZATION FEES OF MACAU’S CONCESSIONAIRES (2023 to 2032):
| Year 1 (2023) | MOP$750 per square meter |
| Year 2 (2024) | MOP$750 per square meter* |
| Year 3 (2025) | MOP$750 per square meter* |
| Year 4 (2026) | MOP$2,500 per square meter |
| Years 5 to 10 (2027 to 2032) | MOP$2,500 per square meter* |
* adjusted for average price index
RelatedPosts
