SJM Resorts Expects Macau to Slash Casino Concession Terms in Half

Officials at SJM Resorts believe all six casino operators currently doing business in China s Macau will receive fresh tenders in 2022. But the company thinks the coveted gaming permits will run for a shorter interval than previously experienced.

When Macau ended Stanley Ho s monopoly on casino gambling after the territory was returned from Portugal to China in 1999, the welcoming of new gaming operators came with 20-year operating privileges.

After a lengthy review process in 2002, SJM, as well as newcomers Galaxy Entertainment and Wynn Resorts, were issued gaming rights that ran for 20 years. Las Vegas Sands, MGM Resorts, and Melco Resorts later gained market entry by receiving sub-concessions from the three full licensees.

Macau is currently amid an in-depth review of its gaming industry, which includes determining the future of its casino market and the number of operators allowed.

SJM Resorts, formerly SJM Holdings, is the casino empire of the late Ho. The company opined this week that it expects the six current concession holders to receive new 10-year operating rights that will allow them to continue doing business in the Chinese Special Administrative Region through 2032.

Macau lawmakers are working with the SAR s Gaming Inspection and Coordination Bureau to determine how the 2022 licensing will play out. The enclave is currently amid a that involves a variety of stakeholders, including the casinos, investors, general public, and Beijing.

Rumblings suggesting vast changes to Macau s gaming industry led to casino stocks invested in the region losing tens of billions of dollars in market valuation last week. But with SJM Resorts, as well as some analysts one being Sanford C. Bernstein forecasting new permits for all six operators, some of the worry has been eased.

SJM, the oldest gaming company in Macau, told Goldman Sachs that a 10-year term is a reasonable length for the next tenure. Company reps reasoned that Macau will take a page out of Singapore s gaming industry playbook.

Singapore is often credited as perfecting the integrated resort business. Its casino duopoly is held by Sands and Malaysia s Genting Group. Prior to the pandemic, Sands and Genting received 10-year licensing extensions in Singapore in exchange for each firm promising to invest at least $3.3 billion into their respective gaming resort properties.

It s becoming more and more likely that the in the region long after 2022. That has led to the casino stocks recouping some of last week s losses.

After a week where the six companies lost a combined $18 billion in market capitalization, shares of the Hong Kong-listed companies collectively climbed 4.3 percent on Tuesday. They made further gains on Wednesday.

MGM China was up 3.8 percent Wednesday, while Galaxy Entertainment climbed 3.2 percent, Sands China 3.1 percent, Melco 2.5 percent, SJM 2.2 percent, and Wynn 1.9 percent.