American Casino Giants Face Wild-Card Rival as Macau Opens License Bids

The bid has shaken things up for the existing six license holders, which include the Macau subsidiaries of the U.S.-based

Las Vegas Sands Corp.

LVS -1.88%

,

Wynn Resorts Ltd.

WYNN -0.73%

and

MGM Resorts International

MGM -1.71%

and their local rivals. The current license holders had been expected by analysts to get their renewals.

The three American casino operators have poured billions of dollars into constructing glitzy Vegas-style casinos since they first obtained licenses two decades ago, helping to make the former Portuguese colony into the world’s biggest gambling hub. A slump in visitors since the beginning of the pandemic has meant empty tables and much lower returns over the past few years.

At the same time, Macau has overhauled its gambling rules to increase regulatory oversight over casino companies, in an effort to ensure they have sufficient financial resources and more closely align their operations with China’s national security interests. The city’s gambling business, especially its junket system—tasked with recruiting high-rollers and lending and collecting money—has been associated with corruption and capital outflows by officials in Beijing.

In the new round, the maximum number of casino licenses will stay at six, but their tenure will be cut by half to 10 years. The six incumbents have long signaled their intention to extend their presence.

Then Genting-linked GMM Ltd. threw its hat in the ring. Genting already operates dozens of casinos in the U.S., U.K. and Southeast Asia, but hasn’t made a foray into Macau.

The seventh bidder “just adds one small wrinkle to the equation,” said James Goldstein, a U.S. retail and gaming analyst at CreditSights. “And it was unexpected. No one likes unexpected things in the market.”

The news caught investors by surprise and, in particular, sent

Wynn Macau’s

stock almost 7% lower on Thursday, before closing only slightly higher on Friday.

Genting Group,

Sands China Ltd.

, Wynn Macau and

MGM China

didn’t immediately respond to requests for comment.

Gloria Tsuen, a senior credit officer at Moody’s Investors Service, said all of the incumbent operators are still in a good position, “considering how much they’ve already invested in Macau and over such a long time.” The new contender will have to play catch-up and increase investments, which would take a bit of time, she added.

Ben Lee, managing partner at IGamiX Management and Consulting Ltd., thinks the Genting-linked company stands a good chance of getting a license.

Thanks to its casino operations in Malaysia, Singapore and the Philippines as well as its cruise ships, the company has an “unrivaled VIP player database” outside of China, Mr. Lee said, which gives it an edge over the existing casinos that had, in the past, relied on Chinese high-rollers.

The company’s good relations with Chinese authorities—the Genting Snow Park served as a competition venue at the 2022 Beijing Olympics, where star athletes like Chloe Kim competed—may also help, Mr. Lee said, especially after the government made national security a greater concern in Macau.

“They would not likely be reporting to other governments that may be in conflict with the Chinese government,” he said.

Write to Elaine Yu at [email protected]

The bid has shaken things up for the existing six license holders, which include the Macau subsidiaries of the U.S.-based

Las Vegas Sands Corp.

LVS -1.88%

,

Wynn Resorts Ltd.

WYNN -0.73%

and

MGM Resorts International

MGM -1.71%

and their local rivals. The current license holders had been expected by analysts to get their renewals.

The three American casino operators have poured billions of dollars into constructing glitzy Vegas-style casinos since they first obtained licenses two decades ago, helping to make the former Portuguese colony into the world’s biggest gambling hub. A slump in visitors since the beginning of the pandemic has meant empty tables and much lower returns over the past few years.

At the same time, Macau has overhauled its gambling rules to increase regulatory oversight over casino companies, in an effort to ensure they have sufficient financial resources and more closely align their operations with China’s national security interests. The city’s gambling business, especially its junket system—tasked with recruiting high-rollers and lending and collecting money—has been associated with corruption and capital outflows by officials in Beijing.

In the new round, the maximum number of casino licenses will stay at six, but their tenure will be cut by half to 10 years. The six incumbents have long signaled their intention to extend their presence.

Then Genting-linked GMM Ltd. threw its hat in the ring. Genting already operates dozens of casinos in the U.S., U.K. and Southeast Asia, but hasn’t made a foray into Macau.

The seventh bidder “just adds one small wrinkle to the equation,” said James Goldstein, a U.S. retail and gaming analyst at CreditSights. “And it was unexpected. No one likes unexpected things in the market.”

The news caught investors by surprise and, in particular, sent

Wynn Macau’s

stock almost 7% lower on Thursday, before closing only slightly higher on Friday.

Genting Group,

Sands China Ltd.

, Wynn Macau and

MGM China

didn’t immediately respond to requests for comment.

Gloria Tsuen, a senior credit officer at Moody’s Investors Service, said all of the incumbent operators are still in a good position, “considering how much they’ve already invested in Macau and over such a long time.” The new contender will have to play catch-up and increase investments, which would take a bit of time, she added.

Ben Lee, managing partner at IGamiX Management and Consulting Ltd., thinks the Genting-linked company stands a good chance of getting a license.

Thanks to its casino operations in Malaysia, Singapore and the Philippines as well as its cruise ships, the company has an “unrivaled VIP player database” outside of China, Mr. Lee said, which gives it an edge over the existing casinos that had, in the past, relied on Chinese high-rollers.

The company’s good relations with Chinese authorities—the Genting Snow Park served as a competition venue at the 2022 Beijing Olympics, where star athletes like Chloe Kim competed—may also help, Mr. Lee said, especially after the government made national security a greater concern in Macau.

“They would not likely be reporting to other governments that may be in conflict with the Chinese government,” he said.

Write to Elaine Yu at [email protected]