The announcement was made by the Secretary for Economy and Finance, Mr Leong Vai Tac, during a press conference organized by the Office of the Government Spokesperson at the Government Headquarters.
According to a statement, the government made the decision to extend the licenses in order to assist its work relating to a new public tender process for Macau’s gaming concessions.
“The extension granted to the two companies was also deemed helpful for the maintenance of social stability, particularly the stability of the job market,” Leong said.
In return for the extension of their license, both SJM and MGM has been required to pay the government a one-off amount of MOP 200 million (US$24.7 million).
It was a decision long predicted by industry observers.
“The extension of the SJM and MGM concessions is not unexpected in our view and this has been consensus thinking for some time,” said Bernstein in a note on Friday.
“Simply put, we believe the extensions have more to do with making the ultimate task of the license rebid situation easier, while at the same time making sure the labor market remains stable,” said Union Gaming.
However, it is still unclear of how the government will tackle the rebidding process come 2022. Union Gaming said that the next administration will likely be the one to tackle the license refreshment / rebid issue – perhaps even extending the expiry beyond 2022.
Bernstein said the cost associated with the 25-month license extension could foreshadow the economic costs of new concessions granted post 2022, meaning a 10-year license extension could cost $120 million.
“However, this is merely a guess based on the extension payment amount just announced. We believe there will be some form of economic cost of any new concessions, but there is no clarity on such cost at present,” said Bernstein.
Regarding additional licenses, Union Gaming analysts believe there is a 50 percent chance that a 7th or 8th concession is added come 2022.
Source: GMB / AG Brief