Macao has tentatively renewed the casino licenses of MGM Resorts, Las Vegas Sands, Wynn Resorts and three Chinese rivals after they promised to help diversify its economy by investing in non-gambling attractions, the government said Saturday.
The announcement is positive news for owners who have invested billions of dollars to build the former Portuguese colony near Hong Kong into the biggest global gambling center. But the requirement to spend on theme parks, music and sports adds to financial pressure at a time when revenue has plunged under anti-virus restrictions.
Regulators will negotiate final terms before licenses take effect Jan. 1, the office of Chief Executive Ho Iat Seng announced. A seventh bidder, newcomer Genting Group of Malaysia, received no license.
The territory of 700,000 people on a peninsula in the South China Sea is the world’s most tourism-dependent economy. It’s under pressure from Chinese President Xi Jinping’s government to diversify with retailing, entertainment and other industries and to reduce reliance on gamblers from the mainland, its main revenue source.
License applicants promised to fulfill requirements including “exploring overseas customer markets and developing non-gaming projects,” a government statement said.
It gave no details, but TDM Radio Macau reported earlier the winners would be expected to invest a total of $12.5 billion.
Macao’s economy has shrunk since anti-virus restrictions that shut down most tourist travel were imposed in 2020.
The Chinese operators include SJM Holdings, part of the empire of the late Stanley Ho, who had a four-decade monopoly on casinos until 2001.
The others are Melco International, run by Ho’s son Lawrence, and Galaxy Entertainment Group.
The decision to allow in foreign-owned casinos in 2002 brought a flood of money to Macao. The six license holders operate a total of 41 casinos.
Annual revenue from slot machines, dice tables and other games peaked at $45 billion in 2013, more than triple Las Vegas’ level. But it slid after Beijing tightened controls on how often mainland gamblers could visit.
By 2019, before the pandemic, gambling revenue sank 19% from 2013s level to $36.4 billion. In 2020, it collapsed 80% to just $7.6 billion. Last year, revenue climbed back to $10.8 billion, but that is down 75% from 2013.
In the latest quarter, the economy shrank by another one-third from last year’s depressed level due to anti-virus controls imposed after outbreaks in June, according to the government. It said gambling revenue plunged 72.5% and tourist arrivals shrank 50.8%.
Adding non-gambling assets would make Macao more like Las Vegas. Casinos there try to attract families and non-gamblers with roller coasters, music, shopping centers, art exhibits and water parks.
SJM operates a zip line and indoor skydiving attractions. It dropped a proposal for a Hello Kitty theme park. The tycoon behind Galaxy talked about a possible theme park resembling the movie “Avatar,” but it never went ahead.