Macao awards casino licenses to MGM, Sands, Wynn, 3 others

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BEIJING Macao has tentatively renewed casino licenses to MGM Resorts Las Vegas Sands, Wynn Resorts, and three Chinese competitors after they pledged to diversify its economy through non-gambling attractions.

This is a positive announcement for owners who have invested billions to make the former Portuguese colony in Hong Kong the largest global gambling center. However, the requirement to spend on music, sports and theme parks adds to financial pressure at an time when revenue has plummeted under anti-virus restrictions.

Regulators will negotiate final terms before licenses take effect Jan. 1, the office of Chief Executive Ho Iat Seng announced. Genting Group of Malaysia, a seventh bidder, was not granted a license.

The territory of 700,000 people on a peninsula in the South China Sea is the world’s most tourism-dependent economy. The government of China President Xi Jinping is urging it to diversify into entertainment, retailing and other industries, and to lessen its dependence on gambling from the mainland, which is its main revenue source. A government statement stated that

License applicants had promised to meet requirements, including “exploring overseas markets and developing non-gaming project,” according to a government statement.

It gave no details, but TDM Radio Macau reported earlier the winners would be expected to invest a total of $12.5 billion.

Macao has seen a decline in its economy since anti-virus restrictions which shut down most tourist travel were placed in 2020.

The Chinese operators are SJM Holdings. They are part of the legacy of Stanley Ho, who held a four-decade-old monopoly over casinos until 2001..

The other operators are Melco International, which is run by Lawrence Ho’s son, and Galaxy Entertainment Group.

The decision to allow foreign-owned casinos to operate in 2002 brought in a flood of funds to Macao. The six license holders operate a total of 41 casinos.

Annual revenue from slot machines, dice tables and other games peaked at $45 billion in 2013, more than triple Las Vegas’ level. It plummeted after Beijing tightened restrictions on mainland gamblers visiting.

By 2019, before the pandemic, gambling revenue sank 19% from 2013’s level to $36.4 billion. It fell to $7.6 billion in 2020,. Last year, revenue climbed back to $10.8 billion, but that is down 75% from 2013. According to the government, the economy contracted by another third from its depressed level last year due to anti-virus controls. It said gambling revenue plunged 72.5% and tourist arrivals shrank 50.8%.

Adding non-gambling assets to Macao would make it more like Las Vegas. There are many casinos that cater to families and non-gamblers. They offer music, roller coasters and shopping centers.

SJM has an indoor skydiving attraction and a zip line. It rejected a proposal to build a Hello Kitty theme park. The Galaxy tycoon talked about a theme park that would resemble the movie “Avatar,” but it was never realized.

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