Macau casino licences for MGM China, SJM extended to 2022
* Extension brings licences on par with other 4 operators
* MGM, SJM to pay 200 million patacas each for extension
* 2022 expiry likely to hang over shares - analysts
(Adds share reaction)
By Farah Master
HONG KONG, March 15 (Reuters) - Macau, the world's largest
gambling hub, has extended casino licences for MGM China
and SJM Holdings until 2022, bringing them
on par with other operators, authorities in the Chinese
territory said on Friday.
The Macau government said the MGM and SJM's licences, set to
expire in 2020, would be extended for another two years with
both operators required to pay a one-off fee of 200 million
patacas ($25 million).
Shares in MGM jumped 10 percent while those in SJM rose over
5 percent after resuming trading following the announcement.
The licence extensions in the only part of China where
casinos are allowed will give authorities more time to consider
how to diversify the gambling-dependent economy.
The expiry of the casino licences had been a major concern
for investors, company executives and analysts as the government
had provided little information until now.
Macau's other operators, which include Sands China
, Wynn Macau, Galaxy Entertainment
and Melco Resorts & Entertainment, will need to rebid
for their licences scheduled to expire in June 2022.
With no information on the rebidding process, the licence
situation will likely hang over the shares of the six operators,
said Grant Govertsen, an analyst at Union Gaming in Macau.
"We believe the extensions have more to do with making the
ultimate task of the licence rebid situation easier, while at
the same time making sure the labour market remains stable," he
Macau's economy is heavily skewed towards casinos with over
80 percent of taxes coming from glitzy gambling halls. China's
government has issued strict warnings to the former Portuguese
colony that it must diversify away from gambling.
Policy and regulatory changes are in focus with the election
this year of a new leader in the special administrative region,
who will work with mainland authorities for the next five years.
The two likely contenders are Ho Iat Seng, president of
Macau's Legislative Assembly, and Lionel Leong, the secretary
for economy and finance, which oversees the gaming industry.
Macau is marking 20 years since its handover from Portuguese
rule, with a slowing mainland economy, a weaker yuan and China's
trade war with the United States threatening to derail growth.
Casino licences were first awarded in a complex process in
the early 2000s, resulting in a slew of legal battles with some
still unresolved. The process remains controversial because
little is publicly known about how the winners were chosen.
Initially concessions were given to Wynn, a Galaxy-Sands
team and SJM. After Galaxy and Sands failed to reach an
operational agreement, they split up with the government
awarding Sands a subconcession licence. This paved the way for
Melco and MGM to receive subconcessions.
SJM Holdings has multiple third party casino operators under
its licence which run independent properties.
Many of these local casino operators have been publicly
jockeying for a licence, with analysts and executives
speculating that the government may permit additional licences
to the existing six operators.
($1 = 8.0750 patacas)
(Reporting By Farah Master; Editing by Himani Sarkar and Darren
First Published: 2019-03-15 05:08:40
Updated 2019-03-15 07:09:00
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