Macau creates special committee to oversee bidding process; casinos continue to face losses amid Covid restrictions

The Macao Government has announced the creation of a Committee for Public Tendering of Concessions for the Operation of Casino Games of Fortune. The nine-person committee will oversee the tendering process of Macao’s gaming concessions, which are set to expire on 31 December, following a six-month extension granted in late June.  

The committee is to study the development of Macao’s gaming sector and provide support in defining the respective policies, and the regulations needed. It must also present proposals on the definition of measures for the gaming sector’s development and operation supervision, and submit proposals on industry guidelines. 

Concession contract extensions signature at Macau's Government Headquarters in June

The committee includes three of Macao’s five policy secretaries: Secretary for Administration and Justice André Cheong Weng Chon; Secretary for Economy and Finance Lei Wai Nong; and Secretary for Social Affairs and Culture Elsie Ao Ieong U.

It also includes five bureau directors: Economic and Technological Development Bureau Director Tai Kin Ip; Macao Government Tourism Office Director Maria Helena de Senna Fernandes, Gaming Inspection and Coordination Bureau Director Adriano Marques Ho, Judiciary Police Director Sit Chong Meng and Land and Urban Construction Bureau Director Lai Weng Leong.

The committee’s ninth member is the secretary-general of the Executive Council Secretariat, Hoi Lai Fong, according to Executive Order No. 135/2022, which was published in the Official Gazette Wednesday, effective immediately.

The committee will elect a chairperson and secretary at its first meeting. The local regulator -the Gaming Inspection and Coordination Bureau- is to provide the committee with administrative, financial, technical, and logistic support.

In accordance with Article 44 of Administrative Regulation No. 26/2001, the committee has powers to analyze and decide all matters relating to the public tendering process and relating to the formulation of concession contracts. Exceptions are either provisional adjudication or actual adjudication of tenders; and other matters specified by law as the responsibility of other entities.

Earlier this week, casinos in the gaming hub reopened after a nearly two-week shutdown mandated in an effort to stop the spread of Covid-19. However, without tourists, business was slow for the gaming venues, and analysts have estimated the closures could cost the casinos $1 billion. 

The lack of tourists is believed to be related to the seven-day quarantine all tourists face before being allowed into the region. Officials have mandated that, even though allowed to return to business, casinos are required to limit staff numbers to 50% of normal and must follow strict disinfection and health guidelines. Employee dining facilities are off limits and local citizens have been directed not to go out except to get food or for emergencies.

According to Hong Kong-based Bernstein Research, the average daily travel in and out of Macau during the week of July 17-23 was down 97% from June's average and 20% less from the prior week, as reported by Las Vegas Review-Journal. 

According to analysts, it could be months before meaningful visitation occurs in Macao. Furthermore, they believe that a recovery from the COVID slowdown involving casino shutdowns, border closures, and other restrictions may not happen until next year.

In Wednesday’s Sands earnings conference call, Sands China Chief Operating Officer Grant Chum said the company is losing more than $1 million a day in cash flow. "Fortunately, Sands China Ltd. (the Chinese operating subsidiary of Sands) and Las Vegas Sands are flush with liquidity, and we estimate 327 days of liquidity in a near-zero revenue environment," he explained. 

Carlo Santarelli, an analyst with Deutsche Bank, told investors in a report that visitation was down 84% compared with the second quarter of 2019, and mass gaming revenue was down 83% from that quarter, which was before the government required casinos to close, as reported by the Las Vegas Review-Journal.

Santarelli noted that Sands China has taken a $1 billion loan from Sands and has $1.78 billion in cash on hand and $1.04 billion in credit capacity. The company continues to pay its employees but isn’t up to full worker capacity because the visitation level doesn’t require it and the government continues to limit employment levels.

According to Joe Greff, a gaming analyst with J.P. Morgan in New York, government constraints on visitation have gotten worse as the year has progressed. Second-quarter visitation was 16% of second-quarter-2019 levels and first-quarter visitation was 18% of levels from three years ago.

As reported by Review-Journal, these analysts have encouraged investors to hold onto their stock because a rebound in Macao, probably in 2023 or beyond, should be robust, something that Sands officials reiterated in their second-quarter earnings conference call Wednesday.

Marina Bay Sands in Singapore

Sands had favorable results from its Singapore Marina Bay Sands property. Singapore represents 55% of the company’s current equity value. Singapore is getting another boost next month when G2E Asia is moving to Singapore and will be held at the Marina Bay Sands on August 24-26.