“The casino licensing process is under review by the Macau Government to determine which operators can continue to do business” in the gaming capital of the world, Bloomberg analyst Margaret Huang, an expert on gambling in Asia, told Lusa, claiming “it is possible that China will seize this opportunity to dilute the influence of foreign investors” in the territory.
The gaming licences expire between 2020 and 2022. To date there, is no known timetable for reviewing the acceptability of the concessionaires nor is it clear whether the existing model of concessions and sub-concessions will be maintained.
“China has been attentive to capital flow issues,” said Huang.
Macau is the only place in China where casino gambling is legal. In 2017, gaming revenues in Macau grew 19.1 per cent yearly to MOP265.7 billion (US$32.8 billion).
For the founder of Newpage Consulting, David Green, a consultant specialising in gaming regulations in Macau, the future development of the US/China trade war will be central to whether the city becomes the scene of economic conflict.
“The commercial war comes at a time when the US is promoting the militarisation of the South China Sea and are trying to form an alliance of countries aiming to be a counterweight to the Chinese ‘One Belt, One Road,'” Mr. Green told Lusa.
The risk is real, but “if it is restricted to tariffs, it is difficult to see US affiliates in Macau being heavily affected,” he continued.
In July, US President Donald Trump imposed import duties on 25 per cent of China’s US$34 billion import volume, as a way to counter what he consider’s Beijing’s “predatory tactics” aimed at the development of China’s technological sector.
China has retaliated by raising taxes to the same value of imports from the United States.
“It all depends upon how the commercial war develops (…). We are no longer talking about rates. I think it is the combination of these events that present a real risk to the interests of these operators [North American with operations in Macau],” he said.
Announced by Chinese President Xi Jinping, the Economic Route of the Silk Route and the Maritime Silk Road of the 21st Century initiative – better known as ‘One Belt, One Road’ – is valued at US$900 billion, and seeks to reactivate the old trade routes between China and Europe via Central Asia, Africa and Southeast Asia.
As a counterweight, the United States is now forming its own alliances to try to stem the growing influence of Beijing, especially in Southeast Asia.
US Secretary of State Mike Pompeo attended meetings of the Association of Southeast Asian Nations (ASEAN) in Singapore on Friday and Saturday, where he announced an investment of about US$300 million for co–operation and security in the Asia Pacific region. Most ASEAN countries have territorial conflicts with Beijing in the South China Sea.
In this geopolitical context and the escalating economic clash between the two major world powers, China may decide not to renew concessions to US gaming operators.
“I think the People’s Republic of China has always been a bit confused by the fact that three concessions have effectively become six, two of which were bought by US affiliates,” explained Mr.Green.
Between March and June 2002, contracts were signed between the Macao Government, Sociedade de Jogos de Macau (SJM), Galaxy Entertainment Group (GEG),and Wynn Resorts Macau for the award of three concessions.
In December of that year an amendment was made to the Galaxy Casino concession contract in which Venetian Macau Limited (VML) was allowed to explore games of fortune or chance in the territory via a sub-concession.
SJM and Wynn then entered into sub-concession agreements with MGM and Melco Resorts.
The Venetian belongs to Sands China, which is a branch of the North American Las Vegas Sands. Wynn and MGM are also corporate groups with the majority of North American capital.
“Certainly, a new public bid will give China an opportunity to dilute the influence of foreign investors if it wishes to do so,” explained the founder of Newpage Consulting.
The question now is “when will this bid take place?” David Green said, noting that Macau’s Chief Executive has the power to “extend the terms of the concessions byfive years.”
Source: GMB / Macau News Agency
