HONG KONG (Reuters) – Macau said on Thursday six casino companies would invest around $15 billion as part of a new 10-year deal signed to operate in the world’s largest gambling hub. Gaming spending is 10 times more than his.
The signing of the deal will ease concerns of investors and management after a lengthy bidding process that threatened to end one company’s operations.
Officials, including Macau’s Mayor Ho Iat Seng and the city’s finance and economy secretary, presided over the signing ceremony at Macau’s Governor’s Palace along with top casino company executives.
Existing operators Sands China (1928.HK), Wynn Macau (1128.HK), Galaxy Entertainment (0027.HK), MGM China (2282.HK), Melco Resorts and SJM Holdings (0880.HK) Malaysia’s Genting (GENT.KL) wins six licenses offered by China’s special administrative regions.
The new agreement will enter into force on January 1, 2023.
Each casino director was invited to sit at a long red table as government officials signed. Executives included Pansy Ho, the billionaire daughter of Macau’s gambling godfather Stanley Ho, who heads MGM China, the Macau subsidiary of MGM Resorts (MGM.N).
Beijing, in particular, is eager to see Macau diversify away from gambling and attract foreign tourists, so operators are expected to focus on non-gaming activities under the new term.
The total investment committed by game companies to develop non-game projects is MOP108.7 billion ($13.57 billion), while the total investment in game projects is MOP10.1 billion, the city government said. rice field.
“The development of Macau’s gaming and tourism industry will enter a new phase,” it said in a statement issued shortly after the signing.
The stakes can get much higher for six companies that rely on Macau’s gambling industry for profitability but have lost billions of dollars over most of the past two years to China’s stringent COVID-19 rules There was no
Beijing’s widespread crackdown on capital outflows from the mainland in recent years, including the arrest of a prominent gambling operator in the former Portuguese colony, has also devastated the once dominant and profitable VIP sector. I am receiving
Genting is a credible threat to Macau operators due to its strong non-gaming track record and mass-market appeal, many executives and analysts said.
failed attempt
Macau’s previous attempts to diversify have been unsuccessful, and casino operators have been hesitant to invest in non-gaming due to high costs, especially as the gambling industry has been far more lucrative. Macau’s gambling industry now accounts for more than 80% of his government revenue.
However, the Macau government has asked the new license holders to prioritize the protection of local employment, the development of Macau’s overseas tourism market, and the promotion of investment in non-gaming sectors, including conferences and herbal medicine. presented.
While the government’s awarding of licenses to incumbents indicates stability and continuity for the tens of thousands of locals they employ, companies have a much bigger account of their non-gaming initiatives than they have in the last two decades. They will face responsibility, officials and analysts said.
Operators are expected to invest a total of MOP100-120 billion in non-gaming over the next 10 years, with Sands and Galaxy each committing around MOP25 billion and the rest MOP15 billion, JP’s analyst said. List DS Kim says: Mr Morgan from Hong Kong said in early December:
“These projects are going to bring new players and tourists to the city and spend a lot of money gambling,” he said.
Macau relies heavily on Chinese tourists. More than 90% of the tourists come from Greater China, including Hong Kong and Taiwan.
($1 = 8.0130 potatoes)
Additional reporting by Twinnie Siu. Edited by Muralikumar Anantharaman
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