Macau, the world’s largest gambling hub, is set to renew gambling licenses in 2022. With trade wars between the US and China ongoing, some felt that lawmakers in Macau would refuse to grant new licenses to US-based gambling operators. A new report by Moody’s Investors Services states that Macau is likely to renew Las Vegas companies’ gaming licenses.
Many of the top casino companies in Las Vegas own major casinos in Macau. Refusal to license these companies would be devastating. Let’s look at what’s happening in Macau right now, and why Moody’s believes that lawmakers will allow the Las Vegas companies to continue operating.
Gambling Revenue in Macau Continues to Drop
It’s been an extremely disappointing year for gambling companies in Macau. For almost all of 2019, gambling revenue has dropped in this city. In May and June, revenue finally began to increase, yet not everyone is convinced that the trend will continue.
There are a number of reasons why this small territory is having such a hard time attracting gamblers. The main reason may be the trade war between the United States and China. This dispute has had a serious impact on China’s economy, slowing it at an unprecedented rate. As a result, many Chinese VIP gamblers are choosing to hold onto their money, rather than wager it in Macau.
There’s also a major increase in casino competition in the region. Several countries in Asia, including Cambodia and the Philippines, are beginning to invest in their gambling markets. Residents in and near these countries are skipping the trip to Macau and simply bet their money close to home.
Recently, the protests in Hong Kong have led to a decrease in tourism in Macau. This gambling hub has everything going against it, yet many of the world’s top casino companies continue to invest here. Fortunately, one of the top US bond credit rating companies believes Macau will choose to allow US companies to continue operating here.
Las Vegas Companies’ Gaming Licenses Likely to be Renewed
As we’ve already mentioned, several Las Vegas-based gambling operators including Las Vegas Sands and Wynn Resorts own major casinos in this territory. Both have also invested billions to expand and improve these hotel-casinos. For a brief moment, there was fear that Macau’s gambling authority would refuse to renew these companies licenses.
Most feel this is highly unlikely. Just last month, Pansy Ho, one of the most influential figures in Macau, stated that gambling companies with an existing gaming license would likely have their licenses renewed in 2022. Choosing to bring in new companies would do more harm than good, she claimed.
Moody’s Investors Services, a major US bond credit rating companies, has echoed that statement.
“We believe there will be changes to existing gaming concession agreements,” Moody’s said in an official report. “but also think it’s unlikely renewals will be rejected.”
The report from Moody’s also claimed that by refusing to renew Las Vegas companies’ gaming licenses, the territory faces economic instability and a serious risk to government finances. These companies bring in millions to the government each month. Officials in this territory won’t risk that money over political differences.
Las Vegas Casino Operators Continue Investing in Macau
It’s clear that Macau is struggling right now. The casinos here are not earning nearly what they were just a few years ago. This isn’t stopping casino companies from investing money here.
Some major companies believe that the recent revenue slump is temporary. Las Vegas Sands, for instance, is currently investing more than $2 billion on casino-resort expansions. MGM Resorts International is also committed to its Macau operations, made clear in a recent statement by spokesman Brian Ahern.
“Macau has transformed into a world-class entertainment destination, and we are looking forward to working with the government to help the region grow even more,” he said. “We believe in the long-term success of the region and will continue to support this vision by building on our diverse, world-class art, entertainment and food and beverage offerings – as we saw recently with the opening of the Mansion luxury villas at MGM Cotai.”
There is still more than two years before the next license renewal process. Based on everything we know, Las Vegas companies’ gaming licenses are in no danger of being revoked. Make sure to stay tuned for more updates on Macau’s casino industry!