U.S. operator’s concessions should be safe from trade war: Bernstein

Wednesday 26th of June 2019

Heightening tension from the U.S.-China trade war has renewed concerns of U.S. casino operators in Macau losing their licenses.

However, according to Bernstein analysts, while the risks are heightened, the scenario where one or more of the operators losing their licenses remain remote “unless the relationship sours significantly further into a cold war environment.”

Should an operator losing their gaming concession, the situation would become an “operating nightmare” said Bernstein, as the operator would retain legal ownership over the real estate and non-gaming elements of their properties, while the government will take ownership of the gaming equipment and gaming floor area.

“This makes for an operating nightmare with one entity (i.e. an incoming new casino concessionaire) owning the casino within a building, that is owned by another entity (real estate owner/ outgoing concessionaire), that houses everything from hotel rooms, retail and food and beverage outlets, and other non-gaming elements like hallways, bathrooms, staff service areas, MEP, car, and bus parking lots, etc.”

“To operate a casino, a casino operator needs access to common areas, hotel rooms, and other property amenities,” explained Bernstein.

The most viable solution, as a result, would be a wholistic sale of the property to the new concessionaire, it said.

Macau’s six gaming concessionaires are due to retender in 2022.

The Macau government has stated that it is currently preparing for a "tender process" for gaming concessions, which involves revising the Macau gaming framework law and regulations and establishing the terms and conditions of the tender.