MACAU – Operators likely to keep licenses
Bernstein: “Much more probable is that the operators will face higher costs”
Inscrutability seems to be a thing of the past in Chinese gaming business, as casino license renewal due over the next year for the six operators in the world’s most lucrative market seems likely to be a matter of how much rather than not just now.
Conversely, as China looks beyond the pandemic, and with the likelihood of a different kind of animal running the White House, one more sensible and statesman-like in the figure of Joe Biden, the tantrums and suspiciously irascible posturing by the COVID-19 stricken Trump a thing of an ignominious past, business practices will be more sensible between the two world-leading economies.
According to economic analysis firm Bernstein Research, “Much more probable is that the operators will face higher costs, either in increased taxation, or increased investment requirements or both. It may be difficult to raise tax on GGR, which is already the highest in the region, although there may be scope for adding tax on gaming profit, or on dividends.”
The Macau casino concessions are set to expire in June next year and, as yet the government has given no indication as to how to handle the process. This month, it indicated that a new draft law will be available next year, leaving a short timetable for the consultation process ahead of implementation.
The government is also likely to want some guarantees built into the new license that will ensure better job opportunities for locals and procurement from local small and medium-sized businesses, and despite the added pressures brought by Covid-19, Bernstein, added: “It’s unlikely that there will be any significant delay in the tender process, with at most a short-term extension given.”
