January 24, 2019

Nearly a month into 2019, we have heard few new words from Macau authorities about the gaming license re-tender process, and speculation is quickly mounting about how it might look. Following is an expansion of the perspective we shared in this recent article from Inside Asian Gaming.

The Innovation Group believes the ongoing delay is driven by the Macau government's need to streamline and balance the opinions of key stakeholders in the process. There is a level of probability that some "surprises" may appear in the outcome of this exercise and we submit that the longer the delay, the more likely there are to be significant, unexpected re-tendering changes. However, we are not concerned by the resulting delay as such a consensus will only help establish and maintain a more stable regulatory structure to propel sustainable development of the world's gaming capital for the long term.

Our intelligence suggests that a true re-tendering process, rather than a technical "renewal," is likely. We expect that each of the six current concessionaires in Macau will need to show what they have contributed to Macau's financial prosperity, social well-being, and cultural development, as well as how they can continue to do so. Further, more focus and weight of evaluation will be given to diversification, particularly in these critical areas:
  • Between Gaming and Non-gaming: New concessionaires will need to develop more non-gaming amenities, larger room inventory, a richer mix of entertainment offerings, and higher service levels to make Macau a true "entertainment hub."
  • Between the Current Chinese-centric Customer Base and a More International Visitor Base: New concession holders will need to attract mainland Chinese visitors of higher commercial quality (i.e. higher trip budgets, longer length of stay, fewer day-trippers) and more international visitors, especially from those covered by and benefiting from the Belt and Road Initiative.
  • Between VIP and Mass: New license grantees will need to generate gaming volumes that are more balanced and predictable, and have less volatility and less reliance on the VIP segment.
Lastly, we expect Beijing to have a fair amount of influence over the re-tendering process and thus will not be surprised to see Macau-, Hong Kong- or even mainland China-rooted concessionaires eventually outnumber their U.S. counterparts.

To learn more about the expected re-tendering process or to discuss broader development across Asia, contact TIG Senior Vice President Michael Zhu.
For more information, please contact:

Michael Zhu
Senior Vice President
The Innovation Group


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