Macau’s Paradise Entertainment Ltd has seemingly flagged its hope to continue providing casino management services on behalf of SJM Resorts at satellite casino Kam Pek Paradise beyond the 31 December 2022 expiration of current casino concessions.
Publishing its financial results for the six months to 30 June 2022 – which saw the company’s losses widen to HK$96.7 million (US$12.3 million) from HK$21.5 million (US$2.7 million) a year earlier – Paradise acknowledged its current revenue share model with SJM for managing Kam Pek will be impacted by the city’s new gaming law. However, it also hinted at plans to continue running casino operations assuming SJM is awarded a new gaming concession under the current re-tender process.
As per Macau’s revised gaming law, casino management firms will no longer be allowed to engage in revenue share agreements with concessionaires for running casinos but can receive an agreed management fee.
“The Group has confirmed its commitment to SJM Resorts to continue providing efficient casino management services for Casino Kam Pek Paradise to 31 December 2022,” the company said.
“If the concession contract between the Macau government and SJM Resorts (pursuant to which Casino Kam Pek Paradise is licensed for operation) is not renewed or further extended upon its stated expiration date, the Group may cease to generate any casino management service revenue, which is currently the Group’s principal source of revenue and may have a material adverse effect on the Group’s business, financial position, results of operations and cash flows.
“The Group shall stay tuned on the developments of the new gaming law in Macau in compliance with regulatory changes, as well as identifying cooperation opportunities in order to contribute to the Macau gaming industry within the ambit of the new gaming law.”
In reporting a widened loss for the first half of 2022, Paradise announced a 29.8% decrease in total revenue to HK$181.8 million (US$23.2 million), mainly due to the decrease in revenue from the provision of casino management services in Macau and the sale and leasing of electronic gaming equipment and systems in Macau. This was partially offset by an increase in revenue from the sale and leasing of electronic gaming equipment and systems in overseas markets.
Adjusted EBITDA for the six-month period was a loss of HK$64.4 million (US$8.2 million), compared with a profit of HK$5.1 million (US$650,000) a year earlier.
GGR at Kam Pek fell 32.1% year-on-year to HK$283.1 million (US$36.1 million), while revenue from the sale and leasing of electronic gaming equipment and systems in Macau declined by 81.3% to HK$4.8 million (US$612,000).
Revenue from the sale/leasing of electronic gaming equipment and systems in overseas markets, mainly from the North American markets, grew by almost 700% to HK$21.3 million (US$2.7 million).
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