Casinos Face Uncertainty as Macau May Push Out Licensing Bids
(Bloomberg) -- Macau’s government signaled it may push out the timeline for casino operators to bid for licenses, a move that will bring uncertainty for an industry already bracing for slowing growth in the world’s biggest gaming mecca.
Macau Chief Executive Fernando Chui addressed the gaming industry in an annual address and briefing Thursday in Macau. What was notable was what was not said. Chui did not outline guidelines on the license bidding process, as the government had said it would this year. Instead of concrete steps on how to carry out the bidding, Chui said the government is now working on amending the gaming law dealing with licenses.
And it was important to read between the lines of what Chui did say: “We will have licenses rebid by the expiration date in 2022. We are studying how to deal with the two that expire earlier.”
The gaming licenses held by the Macau unit of MGM Resorts International and SJM Holdings Ltd. expire in 2020. MGM Chief Executive Officer James Murren said it’s “plausible" that the two licences are extended to 2022 like those of other operators. If that happens, it’s likely the bidding process will also be pushed out closer to 2022, as Chui implied.
That possibility may make Macau’s outlook cloudy, with gaming growth in the $33 billion industry expected to drop to 5 percent next year from an estimated 14 percent this year as high rollers pull back amid an economic slowdown in China.
Hoffman Ma, deputy chairman of Success Universe Group Ltd., which invests in a Macau casino, said it’s too risky for casino operators to make investments with the license bidding process unclear.
That runway of uncertainty may have just gotten longer.
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