Six casinos are basking in the relief that comes with securing a new Macau casino license in the territory. But what happens to the three US-based casinos now?
Three US-based casinos operating in Macau have successfully secured license extensions for the next decade – and attention now turns to what the upcoming 10 years means for these Las Vegas mega brands.
Las Vegas Sands, Wynn Resorts and MGM Resorts all secured license extensions this November following an arduous year-long bidding process overseen by the Chinese government.
The US-based trio form part of the Big Six casinos that operate in Macau, a gambling haven in the South China Sea that attracts millions of tourists to its roulette and blackjack tables every year.
An estimated $36bn flows out of China via Macau and back to the United States every year. The territory is hugely lucrative for these casino operators, which is why they’re willing to cede ground over a number of issues in order to stay on the right side of the Chinese government.
Along with a reduced license period of 10 years – down from the original 20 years struck in 2022 – these casinos operators must:
- Allow greater administrative oversight from the Chinese authorities
- Invest billions of dollars in infrastructure
- Pay more in gambling taxes
- Attract more foreign tourists to their tables
This last stipulation is of particular concern for the Chinese government, who want to attract more tourists from the Malay peninsula, Japan, Korea and Australia to Macau. However, this is proving to be no easy task with China’s Zero Covid policy greatly reducing the number of visitors to the region.
2023 will be the year the new licenses kick in. And here’s how all three US brands reacted to their approvals…
Las Vegas Sands
Las Vegas Sands currently operates in Macau but under the subsidiary Sands China. LVS has granted Sands China a three-year extension to continue using the LVS branding at its Macau resort, as well as in mainland China, Hong Kong and Taiwan.
The agreement means little should change for the board of Las Vegas Sands back home in Nevada. Sands China will pay LVS $377m across the three-year agreement, with the final amount to be calculated at 1.5% of gaming and non-gaming revenues.
Sands China will continue to front the costs of running the Macau casino and reaping profit. Upon its successful license agreement, Sands China stipulated it “is important to the success of the business of the Group since these licensed trademarks and service marks form an integral part of the Group’s corporate identity.”
Las Vegas Sands’ (LVS) share price is up 26% in a month off the back of the Macau licensing approval.
“Our commitment to Macau has never wavered and we are honored to continue the partnership we began with the government and people of Macau 20 years ago,” said Sands CEO Rob Goldstein.
“In the coming decade and beyond, we will remain steadfast in our strategy of continuous investment in Macau — in its economy, its people and its community.
“Macau’s future as an international tourism destination remains bright and we look forward to furthering our leadership role in helping it reach its full potential.”
Wynn Resorts
Wynn Macau forms roughly one quarter of Wynn’s land-based casino empire, which also includes two resorts in Las Vegas, one at Boston Harbor and three in Macau. The group has invested heavily in Macau over the last 20 years and was determined to secure a license extension. Failure to do so would have seen Wynn cede its three properties in the territory, and likely suffer a plunge in its stock price.
So, securing the 10-year license is great news for Wynn. But what next? Well, the company has pledged to spend big on revamping and updating its Macau properties, which should make the tourist experience far more palatable for non-gamblers.
Wynn will inject $596.4m into Wynn Resorts Macau (WRM), and “conduct capital restructuring, so that WRM’s registered capital can be increased from MOP 200.1m to MOP 5bn.”
Wynn Macau has also voted to promote Vice Chairman, COO and Executive Director Ms Linda Chen to President, effective March 1, 2023.
This is all likely to aid Wynn’s expansion elsewhere too. Now the company has a Macau deal in place until 2032, it can focus on the development of the Wynn Marjan in the UAE. The mega complex will be bigger than its Las Vegas resort, cost millions of dollars to build, and be ready for a planned opening in 2026.
MGM Resorts
MGM China is the subsidiary that operates the casino in Macau on behalf of MGM Resorts, and the firm is now flush with cash following a $750m revolving loan facility set up between the Vegas brand and its Macau counterpart.
The deal, announced before the Chinese government approved MGM’s license in Macau, effectively gives MGM China the financial flexibility to improve both the MGM Macau and MGM Cotai properties.
MGM Resorts controls a 56-percent stake in MGM China and has profited greatly from its presence in Macau over the past 20 years. There’s no desire to lose out on this cash cow and investment is needed to prove to the authorities that MGM means business.
This is despite MGM China posting recent quarterly losses of $68.2m – brought on largely by the Zero Covid policy and a lack of tourist and junket gambling in the region.
“MGM Grand Paradise Ltd. (MGM Grand Paradise) would like to express our sincere gratitude to the government of Macao Special Administrative Region for granting us the provisional award of a new gaming concession, allowing us to contribute to the future development of Macao’s integrated tourism and leisure industries,” an MGM statement said.
