Market update: Macau
Is the future bright or is the party over for the (almost former) gambling capital of the world is over? Despite prominent claims, I suggest the outlook is cloudy with frequent thunderstorms for the industry. To survive, operators must be wise and have the capacity to comprehend the north winds in the way the Portuguese did five centuries ago when they established a settlement in China. The capacity to attract foreign patrons – which depending on implementation may even come with a gaming tax bonus – with non-gaming elements must be the main topic of discussion within the operators’ virtual and physical meeting rooms. In 1961, when submitting the proposal for the gaming concession, the late Stanley Ho and his partners promised the moon. In his words, “I promised the moon and I have fulfilled all my promises.” 3 Given the current political, economic, and social background, the moon may not be sufficient to secure a casino gaming concession. Help from the Webb Space Telescope to find satellites or planets may be needed.
Even without a crystal ball, it seems clear that there will be no stratospheric gross gaming revenues for the operators in the next decade. The Macau El Dorado has ended and future revenues may not be sufficient to meet the huge financial obligations assumed over recent years and the current cash burn status caused by the “dynamic Covid 0” policy to cope with the pandemic, and because all six operators are willing to please the government and depart from the pole-position to the coming tender. In gambling jargon, operators seem to be “chasing losses”. This strategy, well-known by the industry, is quite often a highway to ruin. Sincerely, because of what it has represented and what it may still represent to the Macau population and for future generations, I do hope that my predictions are incorrect, and that the future of the industry in Macau brings sunny and prosperous days, at least in the next decade. But, unfortunately, if my concerns are correct, we may have nothing more than casino museums or a metaverse experience in 2035.
CASINOS DE MACAU – História do Maior Mercado de Jogos de Fortuna ou Azar do Mundo, at 158 (Almedina, Coimbra, 2019).
Pedro Cortés is Managing Partner at Rato, Ling, Lei & Cortés - Advogados Lektou and Senior Partner at ZLF Law Office. For more information contact: cortes@lektou.com
Gross revenue from games of fortune in Macao from 2011 to 2021(in billion Macau patacas) Source: Statista 2022
3 See Pedro Cortés and António Lobo Vilela, “Uncle Stanley, The Dancing King of Gambking Who Promised and De- livered the Moon”, Gaming Law Review, 145-164, Apr 2022. Avalaible at http://doi.org/10.1089/glr2.2021.0025
40 • IMGL Magazine • July 2022
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