Casinos facing licence cuts Media report says Macau gaming industry operators to get 5-yr term

KEY IDEAS : 1. A shorter renewal period is expected for Macau's gaming licences. 2. Licence terms may also be harsher. 3. The Sino-US relationship may affect licensing. CASINO-related shares fell on a media report that renewal terms for Macau (澳門) gaming licences may be shortened to just five years. Macau's gaming industry has entered a stable development phase and it is thus not necessary to give out 20- or 10-year licences, and a 5-year licence may be more appropriate, the Hong Kong Economic Journal (信報) quoted a source as saying. Also, the shorter renewal period is said to act as a political restraining move against US-based operators including Wynn Macau (永利) and Sands China (金沙中國), which are among the six Macau casino operators up for licence renewal in 2020 and 2022. The central government will take the Sino-US relationship into consideration when renewing licences, the source said. Both Wynn Macau and Sands China are subsidiaries of US firms. Licence holders may also be required to invest more in the non-gaming business to helpdiversify Macau's economy during the interim review, which falls next year and in 2016, the source said. SJM Holdings (澳博控股) fell 3.5 percent while Galaxy Entertainment (銀河娛樂) slid 2 percent last Wednesday as gaming-related stocks reacted to the report. Macau's Secretary for Economy and Finance (澳門經濟財政司司長), Francis Tam Pak-yuen (譚伯源), said the government will not comment ahead of the interim reviews, adding that future development strategies will also be taken into consideration. He did not react to the political consideration stated in the report, but said the government is open to suggestions. He stressed the Macau government will firmly adhere to its plan that gaming tables will not increase by more than 3 percent annually in 10 years. Analysts said if the licence term is cut to five years, operators will be severely affected as their huge investments mean they need longer return periods. Licence renewals are also expected to involve harsher terms such as higher tax rates, which may see operators post a drop in returns. Meanwhile, MGM China's (美高梅) reported net profit rose by 17.7 percent to HK$5.33 billion last year. The annual net profit of Macau Legend (澳門勵駿) fell 4.8 percent to HK$510 million. (The Standard, Ling Wang, 20 February, 2014) 1. gaming licence (n phr) 博彩牌照 2. restrain (v) 限制 3. operator (n) 經營者 4. subsidiary (n) 附屬公司 5. diversify (v) 使多元化 6. interim review (n phr) 中期檢討