Melco Resorts & Entertainment has ceased all gaming promoters arrangements at its Studio City casino in Macau, and announced a decrease in the projected budget for the Cotai integrated resort planned expansion.
In a filing submitted to the US Securities Exchange Act, Melco Resorts states it has extended VIP rolling chip operations to Studio City Casino to December 31, 2022, but having already ceased all agreements with junket promoters by December of last year.
Sands China has recently also indicated in an annual report to have terminated agreements with its ‘three primary gaming promoters’ in December 2021. Linda Chen, Wynn Macau’s Vice-Chair and COO, said the firm has terminated all its agreements with junket operators by the end of 2021.
The end of junket relationships with major casino operators comes at a time of increased regulatory oversight by China’s authorities towards VIP gaming junket promoters, newly proposed legislation that would reduce license cap and cut junket rooms, and the recent arrest of Alvin Chau and Levo Chan, the heads of the city’s two largest junket groups, Suncity and Tak Chun.
In addition, Studio City International Holdings Ltd, promoter of the Studio City casino resort in Macau, was revealed to have reduced the projected budget for Phase 2 of the resort expansion from US$1.3 billion to US$1.2 billion, as reported by Macau Business.
Melco Resorts and Entertainment Ltd is the gaming operator for Studio City and the majority owner of Studio City International. Melco’s controlled subsidiary has also announced an equity and debt financing that will shore up its liquidity and provide capital to finish the Phase 2 expansion.
In November 2021, Melco held a topping-out ceremony for its Cotai property expansion project, expected to complete construction before December 27, 2022. Studio City Phase 2 will offer approximately 900 additional luxury hotel rooms and suites in two towers, Asia’s largest indoor/outdoor water parks, a Cineplex, fine-dining restaurants, new MICE space and according to the group’s COO David Sisk, a request has already been submitted for new gaming areas.
Melco stated that as of November 2021 it had incurred US$661.2 million of aggregate costs relating to the development of its remaining project, primarily related to the initial design and planning and construction costs.
“We have taken various mitigating measures to manage through the COVID-19 outbreak challenges, such as implementing a cost reduction program to minimize cash outflow of non-essential items and rationalizing our capital expenditure program with deferrals and reductions which benefits our balance sheet,” the group noted in the filing.
Melco Resorts also estimates that gross gaming revenues in Macau will continue to be negatively impacted by the significant travel bans or restrictions, visa restrictions
and quarantine and social distancing requirements so long as these restrictions remain in place.
Meanwhile, Studio City International warned of the risks posed by one of the provisions included in the Macau proposed law amending the gaming law for approval by the Legislative Assembly, which indicate that after a transition period of three years from the effective date of the law amending the gaming law, gaming activities must be operated by a concessionaire within premises owned by the gaming concessionaire, such premises to revert to the Macau government without compensation upon the concession expiration or earlier termination.
“At present, we, and not the Gaming Operator, own the premises of Studio City Casino,” Melco said. “In order to comply with the requirements of the proposed law, if enacted under its currently proposed terms, in order for the gaming business to continue at the Studio City Casino, we would be required to transfer the Studio City Casino premises to the Gaming Operator.”
Original article: https://www.yogonet.com/international/news/2022/02/09/61315-melco-ends-junket-deals-for-macau-39s-studio-city–cuts-ir-expansion-budget-due-to-pandemic-hurdles
