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Read My Lips : No New Concessions (Or Casinos)

The Macau Government issued a statement today saying that there will be no new concessions and no new allocations of land for casino construction.

Read. My. Lips. No. New. Casinos.

Take it away Macau Chief Executive Edmund Ho:

At this stage we've held some assessments and discussions and followed the Central Government's (Beijing's) directives on the gaming industry and decided to take these policy measures.

One can only wonder what this means for some of the properties either in varying stages of design and planning such as Oceanus, Trinity, MegaBox, Hello Kitty and others. I'd guess that the land on Cotai has already been earmarked for casino construction, but the peninsula projects could be in jeopardy, particularly ones that involved demolition and reconstruction over existing buildings and shops. Expect statements from the concession holders shortly.

One thing is for sure, someone woke Caesars Entertainment (formerly Harrah's) CEO Gary Loveman up this morning with some really really really bad news. It's no secret that Caesarrah's has been itching to get into the Macau game, to the tune of buying the Macau Country Club. It looks like their investment into what they hoped to become Caesars Cotai just turned into... a golf course?


What this does create is heightened competition for existing land and concession agreements. Those who are currently holding casino zoned property may very well cancel their plans (if they're not too far down the pipeline) and squat until Johnny Checkbook comes knocking.

Additionally, the possibility of consolidation, purchase or outright takeover looms even larger for some of the six concession (and sub) holders. With Galaxy skirting at $5HK, carrying their debt load might be worth it compared to carrying a golf course. Same goes for Melco PBL, who would be even more attractive given that they're beating the crap out of the big boys right now.

Could be some interesting fluctuation in the gaming sector the short term. With wind of a possible Tracinda buy back of slumping MGM stock, the concession/casino bombshell and non-MPEL operators having to report that the Macau cushion to U.S. economic woes and decreased consumer spending has had the stuffing torn out of it by the competition, there could some fallout in the aftermath of the earnings reports. I wouldn't put it past Kerkorian to be fluffing the pillows a bit early as he masterfully did in advance of Dubai World's offer for City Center.

Strap on your seat belts.


Comments & Discussion:

I've read that the Trinity, Macau Studio City, and City of Dreams casinos are going to be allowed and are still a go.

I can't get confirmation of whether Wynn and MGM's Cotai plans will be allowed since the gov. has n't allocated them the casino land grants yet.

This article and video outlines some of the broad strokes:

I think this means Harrah's is out unless they want to buy a competitor that owns a license. Though, they can't buy Galaxy because of a clause in a contract agreement between Las Vegas Sands and Galaxy, where it notes that they can not merge or form a partnership with any U.S. based casino company.

If they don't buy a casino operator that already has a gaming licence I wonder what they will do with that huge chunk of land they bought late last year.

there's a reason why your handle is -macauman- you're the man of macau! thanks for the tidbits.

caesarrah's is definitely the big loser here.

Damn interesting all around, and the timing was sure a surprise. I wish the statements by the government were more specific, and less ambiguous. Hopefully all companies release their own knoledgable interpretation in the very near term.

Chuck, any more exciting posts coming down the pipe about MPEL?

sorry for the piss poor typing.

yeah... there's at least one on city of dreams... the 'think piece' as mentioned in the prior post. also mulling the credit suisse report about mkt share and the possible new amax-like deal.


"It noted that the Chinese Government, as part of its drive against corruption, is cracking down on Chinese people going overseas to gamble in neighbouring countries including North Korea, Burma and Russia -- but had "kept the net open at one side", in Macau.


Seems the Chinese gov. doesn't want Chinese tourists gambling in any neighbouring countires building new casinos, only Macau.

If you're the Chinese government, that makes perfect sense. Which I guess sucks for the Singapore Sands. Do you think we should cover the Marina Bay Sands here or on the FeltJungle blog? I've been gathering all sorts of info about it but haven't figured out what to do with it.

From the MacauDailyTimes:

"Besides the already approved casino constructions such as the City of Dreams and the Galaxy Mega Resort on the Cotai Strip, the Secretary said other projects awaiting government approvals were also located in the same area and "there are only a few"."

Wondering if I should contact MelcoPBL to see if they have any clue about Trinity.

I've been working on answers to that, as well as many other questions. If I get any, I'll pass them along.

It should probably read "No New Concessions - At the Moment"

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