Genting Threatens the Position of Macau Casino Operators
At approximately 14 minutes before the bidding deadline for a Macau casino concession (license), an unforeseen 7th bidder joined in:
- Two days later, the Gaming Inspection and Coordination Bureau, DCIJ in its Portuguese acronym, welcomed a few representatives from GMM Limited, the 7th bidder;
- Among those people, it was later proven that an employee of Yany Kwan Yan Chi, a Genting partner, was also there;
- Without a doubt, the Genting Group is interested in developing Genting Macau.
However, let’s get more familiar with the general Macau casino landscape to understand why Genting aims to secure a spot in that market.
Macau Casino Landscape Familiarization
Since the Liberalization (liberalização do jogo) Act in 2001, Stanley Ho’s monopoly of the Macau gambling world ended.
Concessions were initially open for three holders. Three additional sub-concessions were also given, leading to the six barons currently holding licenses.
Gambling tourism was and still is an important part of Macau’s overall revenue, even though the last few years’ events dethroned this region as the gambling capital of the world.
Macau gambling industry losses in the past years
Here are the key highlights in terms of Macau gambling losses:
- Due to a reduction in Chinese visitors, which made up about 71% of the total number of tourists in 2019, Macau’s revenue dropped to $10.83 billion in 2021;
- Macau’s gambling revenue in 2019 was more than $35 billion and around 50% of Macau’s income was based on gambling tourism, suggesting how much loss this former Portuguese colony is experiencing;
- It comes as a significant financial shock for Macau concessionaires, which are estimated to lose between US$500 million and US$1 billion per quarter.
In the case of the 7th bidder pushing an established concessionaire out of business, the Macau gambling landscape, as we currently know it, will definitely change.
Land-based casinos are already disadvantaged
Due to the raising popularity of online casinos, land-based casinos from all around the world, including Macau, have been registering lowering numbers of players in the past years.
The Six Macau Casino Operators
Currently, the six Macau casino operators are trying to obtain long-term concessions, bidding for the continuation of their casino businesses.
What can we expect?
The 7th bidder is trying to infiltrate the market to catch the wave of Macau’s recovery foreseen for 2024, which is estimated to increase its gambling revenues to 80% of its 2019 gains.
Right now, the six established casino businesses in Macau are:
- Galaxy Entertainment Group
- Melco Resorts & Entertainment Limited
- MGM Resorts International
- SJM Holdings Limited
- Wynn Macau
- Sands China Ltd.
Until recently, these operators profited off of the proximity to Guangdong, China’s wealthiest province, which has a population of over 100 million people.
Out of that number, a good percent love to gamble, and Macau is just a train ride away.
The Genting group’s history stretches out for a period of 57 years.
This company is characterized as one of Asia’s leading multinationals, entangled all over the globe with:
- leisure and hospitality
- property development
- power generation
- oil palm plantations
- oil and gas
- life sciences and biotechnology activities.
In recent years, this company has seen the loss of Genting Hong Kong due to US$2.8 billion of debt, which led to the loss of Genting’s Resorts World Manila.
However, this group has seen better days with the launch of Resorts World Cruises in Singapore.
Genting Group markets
Since its foundation, the Genting Group has spread across the world, operating casinos and integrated resorts in the Americas, Australia, Malaysia, the Philippines, Singapore, and the United Kingdom. When it comes to the latter, Genting ranks high in our complete UK casino list.
Will Macau be one of the newer additions to this impressive list?
The Bidding War
The situation of bidding for concessions in Macau is an interesting one.
From certain press releases, we found that the government is asking the concessionaires to increase their investment commitments considerably.
In such a case, could Genting steal a place from one of the six established casino businesses?
Prospects are unclear
An analysis of Genting Group’s remaining and future funds concluded that the buying power of this international casino baron might not be enough to build and keep the business open.
This comes as no surprise considering that the six dominating concessionaires in Macau spent, on average, on two integrated resorts, around US$7 billion per piece.
If this source is entirely correct, then Genting could be looking at tough competition.
- If it succeeds, and Genting Macau becomes a reality, we could be looking at a fierce competition for getting clients.
- It could be that this group is already planning to overshadow the competition;
- This can be achieved through an extensive promotions listing, based on familiar models of the online industry, or attractive resort-related offers.
"Why Macau?" and "Why Now?"
There are a few ways to answer these questions, but the truth may differ.
Although there are some presuppositions circling around, which our CasinoAlpha experts will get to in a second, you need to remember that we may never know for sure:
- Whether Genting wants to make it right this time;
- 20 years ago, when Wynn, Galaxy, and SJM got their Macau concessions, the Genting group came close to reaching its own place at the table, but nevertheless lost the bid;
- Whether Genting’s wish to occupy Macau might come from a place of pride, wanting to complete a mental checklist of casino interest points across the world.
Regardless of how realistic these statements may be, they are only speculations.
Macau's Casino Future
In the absence of Chinese citizens, Macau’s economy drastically declined compared to 2019 numbers.
Remember, this was the world’s gambling capital between 2007 – 2020. Afterward, it transferred back to Las Vegas, the most famous casino region in the USA.
However, the future is predicted to be friendly to Macau’s casino businesses. The only question unanswered is if it will include Genting as well.
- Casino development and urban transformation in Macau | Sheyla Zandonai – Academia.edu
- Analysis: Genting aims to upend Macau casino landscape in bidding war | Reuters
- Will Macau Ever Be The World’s Casino Capital Again? (forbes.com)
- IAG – Inside Asian Gaming (asgam.com)
- Genting Group – Malaysia Leading Corporation