OPINION – Satellite of love

The ‘satellite casino’ issue brought forward by the gaming law amendment has brought to the fore an interesting ‘arm wrestle’ between the Macau government and businessmen involved in the sector.

As the gaming law goes through discussion at a Legislative Assembly standing committee no other provision has raised so many questions and debate from legislators and outside groups than the future of casinos operating under properties ran by third-party management entities.

The draft bill, unveiled in January, proposes any casino operating in the city must be established in the assets “owned” by gaming concessionaires. A grace period of three years will be given to gaming concessionaires following the implementation of the revised law to tackle the situation if they have established casinos in the assets owned by other parties.

The bill adds the authorities would also recognise the legal status of “management companies” that oversee all or part of a casino of a gaming concessionaire.

Struggling with poor results amid the pandemic downturn ‘satellite casino’ owners now face the prospect of either closing down or selling part of their properties ownership for a likely lower market price, as gaming concessionaires can just wind down the clock and then make a proposal.

It is also unclear if under the current economic climate concessionaires would even be willing to open their purses to acquire these assets and for what price.

Interestingly, this week Chinese-language newspaper Macao Daily recently published an article citing non-disclosed industry insiders who warned seven satellite casinos were planning to stop operations by mid-year, for reasons going from lack of cash flow to more stringent visa application requirements for mainland gamblers.

Currently, there are 18 operational satellite casinos among a total of 40 casinos in the territory, and 14 of these third-party promoted casinos are run under the license of gaming operator SJM Holdings Ltd while the other four are linked to Galaxy Entertainment Group (GEG) and Melco Resorts and Entertainment Ltd.

Of these, 14 operate under SJM’s license, representing some MOP500 million in gaming earnings last month.

In another report, gaming news platform Allin Media stated four of the satellite casinos set to shut down were located in hotel properties managed by the Golden Dragon Group, the company from well-known businessman and former legislator, Chan Meng Kam.

The timing for the disclosure of the possible closures comes is undoubtedly interesting as the AL committee has finished its first round of discussions and government authorities are expected to return with a possibly revised gaming bill.

Legislators and labour group representatives have been questioning the government on how resident job positions in ‘satellite casinos’ will be protected in case of property closures, but apart from the usual assurances worker interests will be safeguarded, it seems the idea is to just let the market adjust itself under the new parameters.

It is then of interest to the ‘satellite casino’ sector to high up the ante to a life of death situation where either better conditions are given for the transition or more resident workers will find themselves on the dole after the closure of their business.

The closure of the city’s junket operated VIP rooms and operations had already led to an uptick in unemployed residents and the upending of the third party casino sector would certainly generate another.

For now, one can only wait and see who will flinch first in this large-scale game of chicken.

[Editor for Macau News Agency]