As the clock ticks down to the end of a three-year transitional grace period under Macau’s new gaming law, satellite casinos in the region face an uncertain future. Despite the looming 2025 deadline, discussions between the government, gaming concessionaires, and satellite casino operators have yet to take place. Jay Chun, co-chairman and managing director of Paradise Entertainment, expressed his hopes for these critical talks to commence soon, although he acknowledged that the change in government leadership will likely delay the process.
Impending changes under the new gaming law:
Under the updated gaming regulations, satellite casinos will no longer be permitted to share gaming revenues with their concessionaire partners. Instead, they will operate under a management fee structure. This shift, which comes into full effect in 2025, marks a major change in how these venues are structured. Satellite casinos, which are currently managed independently but operate under the licenses of larger concessionaires, will need to transition to a management company model in order to comply with the new regulations.
The deadline for this transition is fast approaching, leaving operators and workers in a state of anticipation. According to Chun, discussions with the government on how this shift will unfold are unlikely to happen until after the new Chief Executive, Sam Hou Fai, assumes office in December 2024. Chun cited the change in leadership as a key factor in the delay, noting that “these discussions will only occur after the new government takes office.”
In September, representatives from the Macao Gaming Industry Employees Home and the Macao Gaming Practitioners Volunteers Association met with then-candidate Sam Hou Fai to raise concerns about the potential closure of satellite casinos and its impact on local jobs. They emphasized the need to protect workers’ employment rights and highlighted the importance of paid training programs to support the sustainable development of the industry, urging that employees be given the resources needed to adapt to Macau’s evolving gaming landscape.
The potential consequences of the new law are a major concern for both casino operators and their employees. The possibility of closures affecting nearly 10,000 local workers has raised alarm in the community. Legislator José Pereira Coutinho, in a recent written inquiry, highlighted the impact the closures could have on the job market, stressing the importance of understanding the future of satellite casinos in order to avoid mass job losses.
For his part, Chun remains hopeful that these casinos will continue to operate beyond the grace period. He emphasized the importance of job security, especially considering the thousands of employees who depend on these venues for their livelihoods. “We have many employees, and no one wishes for these workers to abruptly lose their jobs,” Chun said, as reported by Macau Business.
The ongoing uncertainty is compounded by the unique circumstances each satellite venue faces as they approach the transition. Chun explained that “each [satellite] venue faces unique circumstances,” making the calculation of appropriate management fees a complex process that will require detailed discussions with the government and concessionaires.
Satellite casino closures and the impact of COVID-19:
The backdrop to these challenges is the recent wave of closures in Macau’s casino industry. Seven satellite casinos shut down in 2022, a move that was largely attributed to the combination of the new gaming law and the devastating impacts of the COVID-19 pandemic. The closures have already contributed to the loss of hundreds of jobs, further exacerbating the situation as satellite casino operators try to navigate the regulatory changes.
At present, Macau has 30 casinos, 11 of which are satellite casinos. Nine of these operate under the license of SJM Holdings, one of the region’s primary gaming concessionaires. Despite the setbacks, Chun remains optimistic about the long-term viability of satellite casinos, believing that they can continue to thrive beyond 2025 if proper adjustments are made.
In a related development, the MGS Entertainment Show, an annual event that serves as a major platform for the casino industry in Macau, will not take place this year. This marks a notable shift for the event, which has been organized by the Macau Gaming Equipment Manufacturers Association (MGEMA) since 2013. However, Chun, who also serves as the chairman of MGEMA, confirmed that the show will return in the future, with more details about its next iteration to be revealed next year.
