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Macau May Require Concession Candidates to Invest More

Posted on 25/11/2022

The government in the special administrative region of Macau is reportedly asking concession applicants to increase their investment. The region’s gambling industry has been struggling for a while, which may be why Macau is demanding a more substantial guarantee from to-be concessionaires.

Macau Reportedly Asked Companies to Invest More

TDM Portuguese Radio first reported that Macau expects the seven casino companies that hope to operate gambling for the next 10 years to increase their investment. This alleged demand came in the wake of last week’s negotiations when the bidders submitted their final proposals to the government.
Only six companies will be allowed to operate gambling in the special administrative region, as per its rules. Throughout the decade-long concession period, the companies will have to pay a total of $12.5 billion. Galaxy Entertainment Group and Sands China are required to invest $2.5 billion each, while the other four companies will invest around $1.88 per operator.

However, Macau has allegedly changed its mind and will actually demand investments of around $6 billion from Galaxy Entertainment and Sands China. The other companies will also be required to pay more than the previously discussed sum. In addition, concessionaires might be required to invest in local culture, build an art museum, sponsor concerts and host annual conventions.

The New Concessionaires Will Be Crowned Soon

Experts expect the negotiations between the concession candidates to be concluded soon. The government of Macau will evaluate the bidders’ proposals and will issue six concessions to the best-suited companies. The government expects concessionaires to be able to invest in the region, nurture tourism and bring more value than simply offering gaming.

The final say on which companies would win a concession belongs to Ho Iat-seng, Macau’s chief executive. Bidders who receive a provisional concession will also have to provide information to the Gaming Inspection and Coordination Bureau and have a minimum capital of $625 million. Following that, the government will draft the final contracts and give operators five days to express their opinions.
In the best case scenario, the final concessions will be handed out before the end of the year, allowing the new concessions to take effect from January 1 next year.

Meanwhile, Macau’s gambling industry continues to lag because of the disastrous effect of the COVID-19 pandemic. The suboptimal GGR results in Macau have forced certain companies to support their Macau-based arms with loans to help them survive the COVID fallout.

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