US gaming operators expected to receive same treatment as Asian counterparts in future license process – Fitch

Fitch Ratings indicated in a note that it expects US-based gaming concession holders in Macau to be treated on a ‘level playing field with their Asian counterparts’ by the future administration in the incoming gaming concession process.

With the future gaming concession tender process set to take place in 2022, some fears have been expressed that US-based operators – Sands China, MGM China, and Wynn Macau – could be impacted by the ongoing trade dispute between the US and China.

However, the financial company was optimistic such a scenario would not materialise ‘given the large amount of foreign investment, positive local sentiment on the concession holders (jobs, local investment), and adverse impact an effective nationalization of gaming could have on broader foreign investment in China and its special administrative regions (SARs).

The Fitch Ratings gaming team held a tour to Macau in October, meeting with most concession holders, five Macau government agencies and visiting most major properties.

‘We came away confident that the government’s approach to the 2022 concession rebid will be pragmatic and a priority for the new Chief Executive (CE) as he takes office in December 2019,’ Fitch indicated.

Ho Iat Seng is set to be sworn-in a the new CE on December 20 of this year, with Fitch also noting that all eyes will be set on the legislative amendment to Gaming Law 16/2001, which designates the number of concessions, tenure, and tax rate.

‘Following that, conditions can be set for the rebidding process. The CE does have executive power to extend all concessions for five years, though we put a low probability on this occurring,’ the note indicated.

However, Fitch admitted there were still other risks remaining such as the risk that a seventh concessionaire could be added, or that incremental investment and changes are made to the current effective 39 per cent tax rate, but were still manageable.

Chan Meng Kam’s Golden Dragon group, Macau Legend, and Suncity have all stated they would be interested in bidding to become a possible seventh gaming concessionaire.