Macau 2022 Tenders Raise Uncertainty As Former Advisors Chime On The Deadline

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Article by : Helen Oct 7, 2020

Macau gaming industry is anticipating the year 2022. A lot of changes are taking place for the southern Chinese region. Six different operations require renewed licenses in 2022.

Three of Macau gaming organizations are in the United States. The other three are on the continent of Asia. With Macau operating foreign affairs, getting everything under one accord during the pandemic is a challenge itself.

A new tender process is required as uncertainty weighs in through the pandemic. As COVID-19 continues to affect the gaming industry, various options are soon to play out. Unprecedented measures caused China to receive the first wave of coronavirus earlier than the United States.

Macau’s gaming sector donated $22.5 million in an effort to fight coronavirus. Suncity Group chipped in with $5million, topping the list of donators. The pandemic came with its problems along with the tender deadline approaching. Fortunately, organizations could pitch in to topple the global pandemic.

Under gaming law, five years can be added on renewal. Five years could add a lot of time for concessions to become stabilized again. Lack of capacity harms revenue directly. Getting regular traction back under control will likely take years at a time. As China slowly lifts travel and visa restrictions, those numbers will slightly rise.

Macau gaming attractions contribute to the region being a tourist attraction. During the first quarter, the six operators lost 60 percent of year-to-year gross revenue. That totals out to MOP 30.48 billion (US$3.82 billion).

Fast-forwarding to September, gross is expected to fall by a median of 86 percent. This news comes after a consecutive five-month fall of 90 percent. October is forecasting a GGR low of 67 percent year-to-year.

Tax rates and revenue loss is working against the Macau gaming organization. With an unknown expiration date on the pandemic, tax rates are fixing to be a burden on Macau organizations. Companies look to retain money to prepare for the upcoming renewal.

Lam Kai Kong, the director of the General Association of Administrators and Promoters for the Macau Gaming Industry, spoke to the press at the University of Macau. Kong expects gaming revenue to continue to drop as time progresses. A turnaround is wanted as gaming license concessions soon expire.

During the beginning of the second quarter of 2020, brokerage J.P. Morgan Securities forecasted the renewal bidding process being postponed by a year or so past the current June 2022 date. Postponed renewal gathers time for an ultimate decision.

An international open tender is available for the future of gaming concessions. Investors from all over can call in for upcoming ownership. That leaves a game of open bidding for the tenders. Chief Executive Ho Iat Seng clarified the new ordeal at a Government Headquarters press conference back in April.

Chief Executive Ho Iat Seng stated in a separate Policy Address that there would not be an automatic renewal for concessions or sub-concession in 2022. Current gaming tax rates are at 35 percent. A firm standing from Macau government advisors keeps there. Iat Seng made his standing very clear.

The government does not have any plan to reduce the gaming tax rate.

Ho Iat Seng, Chief Executive of Macau

The tax rate remains the same, while revenue fluctuates until further notice. Hopefully, the GGR does not reach record lows, and recovery can take place sooner than later. The predictions on the continued money loss could be right. At least after coronavirus restrictions lift, tourist attractions will pick up. Time will tell if an extension after the license expiration date is necessary.

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