2020, Stanley Ho’s second headache

The three casinos in Portugal are big business for Stanley Ho and STDM in Europe. With the concession expiring in 2020, with no possible extension, STDM fears the new, international tender signals the end of a 60-year relationship.

The two gambling concessions owned by Stanley Ho end in 2020. Macau’s (via SJM) has been extended until 2022, but that of Portugal (via STDM / Estoril Sol) will not only not be extended (Portuguese law forbids it) but nothing is known about the form of the international tender.

The Portuguese Government says it is preparing documentation related to the launch of the contest but has not yet committed to dates.

Industry sources speaking to Macau Business in Lisbon admit that this will happen in the Summer, until the end of the year, but they consider it a very tight deadline.

The STDM concession expires on 31st December. All sources contacted by Macau Business expect that a highly attended competition, with the presence of powerful international companies, will inevitably end in complaints – and therefore in court.

Should the result of the competition be challenged it may be that on New Year’s Day 2021 no new concessionaire will appear in the gambling district of the Portuguese capital.

There is another concern that the Estoril Sol officials are at no pains to hide: apparently, the Portuguese Government pledged to listen to the incumbent concessionaire before elaborating upon and publicising the terms of the public tender that will apply to the old Casino Estoril and the newer Casino Lisboa.

As far as is known this hearing did not happen, causing anxiety in the ranks of the STDM managers in Lisbon. The fact that this is an international public tender and is likely to attract major operators from all over the world is of considerable concern to those responsible for Estoril Sol.

If a decisive criterion in the choice of winner is the value of the initial counterparts (in addition to taxes paid annually by law), there is a conviction that STDM may lose a concession it has had in Portugal (Estoril) for 60 years!

Important in this context will also be the duration of the contract: 30 years is not equal to 20, the minimum that our sources understand as reasonable to enable the business and investments that the government may require.

The lack of definition of the model and launch date of the competition have already led Estoril Sol to freeze investment, for example, in the machine park, which would not be recoverable within a year.

Europe’s largest gambling hall

The Estoril Sol group is, regardless of the criteria analysed, market leader in the casino sector in Portugal.

In addition to the two rooms it operates in the Lisbon area there is a second concession in Póvoa de Varzim. Estoril and Lisbon, the two largest Portuguese casinos, represent 46.17 per cent of the sector’s market share (only Casino Lisboa stands out at about 27 per cent).

In 2018, the group recorded gross revenues in excess of €196.6 million, an increase of 2.3 per cent over 2017. Of this, Casino Lisboa contributed €86.7 million and Estoril €64 million.

The Lisbon gambling hall, Europe’s largest, has existed for 13 years (since 19th April 2006) generating gross receipts of €1,097 million since its opening, with the vast majority obtained through slot machines (82%). It has so far involved an overall investment of €120 million.

Over the course of these 13 years, only Casino Lisboa paid the state €582.1 million and delivered prizes in the same period of €5330 million.

In 2018, these two casinos (plus the smaller Póvoa) paid more than €64 million in taxes to the state. Accounts compiled over the last four years reveal that these three casinos put more than €233 million into the public coffers.

Last year, Portuguese casinos accumulated €318.8 million in revenues from the exploitation of gambling. The Estoril-Sol group, with two concessions, posted turnover in the order of €196.8 million.

While the Estoril casino is a more classic gambling space, Casino Lisboa is more attuned to what is known as non-gaming in Macau: in these 13 years it has staged more than 147 shows and welcomed 22 million visitors.