Saturday, 20 Jul 2019 01:25:52 AM

American casino operators to face possible challenges in Macau

In Macau, a slowing economy alongside the prospects of a heightened trade war between the United States and China could reportedly lead to significant challenges for the three foreign gambling firms that operate casinos in the former Portuguese enclave.

Expert analysis:

According to Friday reports from GGRAsia and the Macau News Agency, this is the view contained in a market assessment concerning the upcoming twelve months published late last week by specialist political and corporate risk consultancy Steve Vickers and Associates Limited.

American firms in danger:

The Hong Kong-headquartered agency reportedly used its 2019 Asia Risk Assessment Report to warn that the ongoing geopolitical tensions between the planet’s two largest economies could lead officials in Macau to work towards ‘diluting’ the considerable local presence of the American casino industry. The assessment purportedly explained that this might encompass moves to encourage local firms to take over or buy large stakes in existing concessionaires that are majority-owned by American investors.

Republican ties:

Of the six firms authorized to operate casinos in Macau, the evaluation reportedly stated that three are American-owned encompassing the MGM China Holdings Limited subsidiary of Las Vegas-based MGM Resorts International as well as the local Sands China Limited and Wynn Macau Limited subordinates of Las Vegas Sands Corporation and Wynn Resorts Limited respectively. The examination purportedly declared that some local government officials are unhappy with ‘the links between gaming tycoons and the Republican Party’, which is affiliated with controversial United States President Donald Trump, and could ‘simply refuse to grant a new right to new concessionaires’ when their current licenses expire in 2022 and 2022.

Chief Executive succession:

The investigation from Steve Vickers and Associates Limited moreover reportedly predicted that such moves could be more likely if Ho Iat Seng replaces the outgoing Fernando Chui Sai On as Chief Executive for Macau at the end of the year. The analysis purportedly detailed that Ho was behind a recent campaign that ousted Portuguese jurists from the 33-member Legislative Assembly with the legislator additionally said to be eager to institute a ‘Sinofication of the gaming sector’ policy.

Reportedly read the study from Steve Vickers and Associates Limited…

“Ho, should he become Chief Executive, could espouse such a move. Current thinking is that the government will want to extend the [2020-expiring] concessions until 2022, so as to deal with them all at once. Such a move would buy time. Little else is manifest.”

Economic slow-down:

Regarding the economy, the firm’s exploration reportedly also proclaimed that local overall gross domestic product (GDP) growth hit only at 6.8% last year owing to softer domestic demand in China although Beijing seemingly remains committed to a diversification policy that would see Macau continue to move away from an over-reliance on gambling.

'Cash cow’ perspective:

However, the analysis from Steve Vickers and Associates Limited reportedly furthermore declared that Macau’s government also does ‘not want to destabilize’ the casino industry and considers the sector to be a ‘veritable cash cow’ that last year posted a 14% increase year-on-year in annual gross gaming revenues to $37.6 billion.

Reportedly read the study from Steve Vickers and Associates Limited…

“The Macau government will thus appraise both the economy and geopolitics when taking any decision.”

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