Inside Asian Gaming

IAG JAPAN APR 2019 10 www.asgam.com Ben Blaschke Managing Editor We crave your feedback. Please email your comments to bb@asgam.com. EDITORIAL Questions remain inMacau re-tenderingpuzzle T he announcement by Macau’s government on 15 March that it had agreed to extend the concession contracts of SJM and MGM until 26 June 2022 has shed little light on what to expect from the SAR’s license re-tendering process. Having originally promised to release details of its re- tendering plan by the middle of 2018, the decision to delay confirmation of the license extensions – which had long been anticipated – conveniently negates any need for the current administration, under Chief Executive Fernando Chui Sai On, to act further given its term officially expires in December. But the wait for clarification could prove much longer than that. As speculated by Union Gaming’s Macau-based analyst Grant Govertsen, “The new administration will take office at the end of this year, at which point we would expect amulti- year study to take place (potentially taking a wait-and-see approach to Japan) and thus necessitating concession extensions for all six perhaps well beyond 2022.” In other words, there is every chance we’ll still be sitting here in five years’ time asking the very same questions about Macau’s license re-tendering process as we are now. But that’s not necessarily bad news for Macau’s six operators. In the case of SJM and MGM, confirmation that their licenses, originally due to expire in 2020, would instead be extended by two years to come into line with the other four provides some much-needed time to get their houses in order. And it will be particularly comforting for SJM, which can now focus all energies on finally launching its long-awaited Cotai integrated resort, the HK$36 billion Grand Lisboa Palace, early next year. In a filing to the Hong Kong Stock Exchange on the day of the announcement, SJM said the concession extension “represents an important development for the Group as it places [SJM] in the same position as the other concessionaires when the Macau Government considers inviting tenders for the next round of gaming concessions.” MGM also pointed to the extension as providing better opportunities to finance the business and plan for future capital expenditure opportunities. Not to mention that it is now guaranteed an extra two years of operations in the world’s most lucrative casino hub. Yet while SJM and MGM can now move ahead with far greater certainty, it seems the wait to learn more about Macau’s re-tendering plans has been extended as well. In particular, we still know nothing about what is expected of the SAR’s six concessionaires in terms of stating their case for renewal, what financial obligations will accompany it nor what opportunities will be presented for new operators to enter the market. Govertsen, for his part, puts the likelihood of a seventh (or eighth) licensee being welcomed into the enclave at 50/50. For now though, any such speculation is little more than a roll of the dice.