Macau has tentatively renewed the casino licenses of MGM Resorts International, Las Vegas Sands Corp, Wynn Resorts Ltd and three Chinese rivals after they promised to help diversify its economy by investing in non-gambling attractions, the government said on Saturday.
The announcement is positive news for owners who have invested billions of US dollars to turn the former Portuguese colony near Hong Kong into the world’s larges gambling hub.
However, the requirement to spend on theme parks, music and sports adds to financial pressure at a time when revenue has plunged under COVID-19 restrictions.
Regulators are to negotiate final terms before the licenses take effect on Jan. 1, the office of Macanese Chief Executive Ho Iat Seng (賀一誠) said.
A seventh bidder, newcomer Genting Group of Malaysia, did not receive a license.
The territory of 700,000 people on a peninsula in the South China Sea is the world’s most tourism-dependent economy. It is under pressure from Chinese President Xi Jinping’s (習近平) government to diversify with retailing, entertainment and other industries and to reduce reliance on gamblers from the mainland, its main revenue source.
License applicants promised to fulfill requirements including “exploring overseas customer markets and developing non-gaming projects,” a government statement said.
It gave no details, but TDM Radio Macau reported that the winners would be expected to invest a total of US$12.5 billion.
Macau’s economy has shrunk since COVID-19 restrictions shut down most tourist travel in 2020.
The Chinese operators include SJM Holdings Ltd (澳門博彩控股), part of the empire of the late Stanley Ho (何鴻燊), who had a four-decade monopoly on casinos until 2001.
The others are Melco International Development Ltd (新濠國際發展), run by Ho’s son Lawrence (何猷龍), and Galaxy Entertainment Group (銀河娛樂集團).
The decision to allow in foreign-owned casinos in 2002 brought a flood of money to Macau. The six license holders operate a combined 41 casinos.
Annual revenue from slot machines, dice tables and other games peaked at US$45 billion in 2013, more than triple Las Vegas’ level.
However, it slid after Beijing tightened controls on how often mainland gamblers could visit.
By 2019, before the COVID-19 pandemic, gambling revenue sank 19 percent from 2013’s level to US$36.4 billion. In 2020, it collapsed 80 percent to just US$7.6 billion. Last year, revenue climbed back to US$10.8 billion, but that is down 75 percent from 2013.
In the latest quarter, the economy shrank by another one-third from last year’s depressed level due to anti-virus controls imposed after outbreaks in June, the government said, adding that gambling revenue plunged 72.5 percent and tourist arrivals shrank 50.8 percent.
Adding non-gambling assets would make Macau more like Las Vegas. Casinos there try to attract families and non-gamblers with roller coasters, music, shopping centers, art exhibits and water parks.
SJM operates a zip line and indoor skydiving attractions. It dropped a proposal for a Hello Kitty theme park. The tycoon behind Galaxy talked about a possible theme park resembling the movie Avatar, which never went ahead.
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