The concessions of SJM and MGM China will expire on June 26, 2022, the same as Sands China, Wynn Macau, Galaxy Entertainment Group and Melco Resorts & Entertainment Limited. SJM and MGM China will have to pay 200 million patacas (US$24.7 million) each for the extension.
The move would synchronise the bidding and renewal process for all six gambling concessionaires in Macau to align with the next term of the territory’s government, according to a research report by Credit Suisse.
Shares of both MGM China and SJM were suspended on Friday.
The expiration of casino licences in the Chinese territory of Macau has been a key uncertainty for investors, executives and analysts, with the government previously declining to give any information about the process.
Macau's casino operators, which also include Sands China , Wynn Macau, Galaxy Entertainment and Melco Resorts & Entertainment, will all need to rebid for licenses once they expire in 2022. There has been no detail as to what or how the process will be.
Jim Murren, Chairman and Chief Executive Officer of MGM Resorts and Chairman person of MGM China commented: "We are grateful for the support of the Macau government to have authorized and extended our sub-concession to now align with the rest of the market. We continue to believe in the long-term success of Macau. As the region continues to grow into an international leisure and tourism destination, MGM China remains committed to supporting this vision through our one-of-a-kind experiences in art, entertainment, and diverse food and beverage programming, as well as our stunning Mansion villas at MGM Cotai, which open later this month."
In connection with the extension, MGM Grand Paradise will pay the government of Macau MOP200 million (equivalent to approximately HK$194.17 million or US$24.73 million) upon signing of the Extension Agreement as contract premium for such extension.
In addition, on March 14, 2019, MGM Grand Paradise also executed the MGM SJM Agreement with SJMSA, pursuant to which MGM Grand Paradise shall pay SJMSA an amount of MOP20 million (equivalent to approximately HK$19.42 million or US$2.47 million) in connection of the extension of the sub-concession.
A note by analyst Grant Govertsen of Union Gaming Securities Asia Ltd, anticipated there would be a new public tender process “at some point towards the middle of the next decade” under a different Macau administration from the current one, and that “all of the Macau Big Six” would “remain in Macau”. Such a timeline for a public tender assumes an extension to the licences of the six incumbent operators would only occur after what will now be the common expiry date of 2022 for existing rights.
“We also expect a seventh (or eighth) concession could materialise in part to clean up the service provider casino construct,” added Govertsen.