Executive Council: Macau receives six 10-year casino licenses

The blueprint for a government bill that would enable future casino licensing in the former Portuguese enclave has been made public by the advisory committee to the Macau Chief Executive. The present licenses, which have a 20-year lifespan, are scheduled to expire in June. Due to a sort of loophole that permitted them to get sub-licenses from the people who won the original tender, half of the current operators were able to get concessions. Sub-licenses won't be a component of the new licensing regime.

Seven 10-Year Licenses

The Macau divisions of Melco, MGM, and Sands were in fact running under the first concessions given to Wynn Macau, SJM Holdings, and Galaxy Entertainment Group Ltd. They'll be able to compete going forward for their own 10-year licenses with a possibility of a 3-year extension. In total, six licenses will be put up for bid.

Although the law will shortly be submitted to the Macau Legislative Assembly for a vote, it is impossible to predict how long that process would take due to a number of factors. The bill's provisions are subject to change by the Assembly, and prior statements suggested that the government would insist on amending the city's gaming laws concurrently with or in addition to a new public tender.

According to GGRAsia, if additional time is required for a thorough study, the government might be willing to prolong the current concessions.

Thresholds for New Ownership and Share Capital

According to the present working measure submitted to the Legislative Assembly for future changes and a vote, ownership in the corporations will need to change somewhat. An entity's managing director must own at least 15% of the share capital and be a permanent resident of Macau. Additionally, only a maximum of 30% of the company's shares could be publicly disclosed. According to a press release from the Executive Council, the share distribution would strengthen the company's ties with the Macau government.

As a result of two decades of expansion and a significantly higher hurdle for serious competitors, the minimum necessary share capital would also need to raise 25 times from the existing MOP200 million minimum threshold to MOP5 billion (US$625 million).

The government has just declared that businesses from all countries will be treated equally as long as they meet all of the requirements.

There is no indication that the numerous taxes and fees that together provide a de facto tax rate of 39% will change from their existing 35% levy on gross gaming revenue.