Macau Changes Approach to Satellite Casinos Again Ahead of Gambling Law Reform

Posted on: May 16, 2022, 05:37h. 

Last updated on: May 16, 2022, 12:09h.

Erik Gibbs Read More
Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

Macau is eliminating a proposal from its gambling reform that significantly altered how satellite casinos would operate. Instead, third-party companies will be able to run the venues, but with certain restrictions.

Kampek Paradise Casino
Kampek Paradise Casino, one of Macau’s satellite casinos. A change to the city’s gambling reform could allow it and others to remain in place. (Image: Maven of Macau)

Macau’s new gambling laws are coming within the next few weeks. It’s going to be the biggest shakeup in the Special Administrative Region’s (SAR) casino industry in years. Some of the expected changes have already led to a shift in partnerships and daily activity.

One of the reforms focused on satellite casinos. Information previously released indicated that only primary concessionaires would be able to operate the venues. This led to a number of satellites closing their doors over the past few months.

That may have been a premature move. Chan Chak Mo, the president of the Standing Committee of Macau’s Legislative Assembly, told reporters on Friday that the government will forego the new ownership requirements. However, this doesn’t mean that the current status quo will remain.

Satellite Casinos Back In Orbit

Chan explained that the government will allow third-party management companies to operate the venues. This is a flip from the initial language of the gambling reform. Almost a dozen satellite casinos already announced their anticipated departure from the market, based solely on the rumor that the new gambling laws changed ownership rights.

Those third-party entities, however, won’t be able to claim a stake in the gambling action. They aren’t entitled to receive a share of any gaming revenue. Instead, their income will be the result of management agreements they negotiate with the concessionaires.

There will still be a three-year grace period for concessionaires to reach agreements with new or existing operators. This was to be the case under the previous version of the gambling reform, which stated that only licensed concessionaires could operate the satellites.

The lack of revenue sharing might still be a deal-breaker for some companies, although they’ve known about the potential for changes for years. However, it won’t be impossible to find replacements.

SJM Holdings has 14 satellites in Macau, while Galaxy Entertainment and Melco Resorts and Entertainment have three and one, respectively. Should their satellite operators complete their exit, other companies will enter.

More Legal Changes Coming

Chan announced the changes following a meeting that included the committee, Secretary for Economy and Finance Lei Wai Nong, and other government officials. While a lot of the details of the private meeting haven’t been revealed, it appears as though officials realize that the planned course of action was going to be overwhelmingly detrimental to Macau’s growth.

Another change to the gambling reform will give current concessionaires a little bit of solace. Previously, the updated draft of the new gambling laws included a provision forcing a corporate entity holding a concession into dissolution if it doesn’t receive a new license. Macau still anticipates conducting the re-licensing process at the end of this year.

That meant that an operator would essentially lose its entire footprint in the city. Macau lawmakers could scrap that provision in the updated version of the gambling reform.

This will depend on whether it receives enough support from the Legislative Assembly. As a result, the concessionaire will be able to continue any non-gaming activity, even if it doesn’t continue operating a casino.

Most industry insiders expect Macau to give the six existing concessionaires new licenses. However, the fact that the city made provisions to address future operations emphasizes the delicate nature with which Macau is approaching its reform.