Macau satellite casinos, which operate under the licences of the city’s gaming concessionaires, are on notice to change their operational model by the end of 2025. The change could jeopardise thousands of local jobs and also affect small local businesses — including the satellites themselves.
According to Macau Business, CBRE Equity Research believes satellites may not be “financially viable going forward”. It also speculated that SJM Holdings may close its satellites to drive traffic to Grand Lisboa Palace.
The move could “reallocate some of that table capacity (and potentially customers)” to the Cotai flagship, CBRE wrote. That could help SJM “grow its mass market business”.
Satellite casinos, managed and promoted by third parties, now operate under a profit-sharing model. Of 11 such properties in Macau, nine operate under the SJM licence. The remainder piggyback on the licences of Melco and Galaxy.
But that is all about to change. In 2022, when Macau amended its gaming law, it gave satellite casinos three years to shift to a different model. By the end of 2025, all satellites must be directly owned by licensed concessionaires. Those that survive the shakeup will make their money through management fees, not shared revenues.
SJM swings to profitability, commits to efficiency
In its fourth-quarter earnings report, issued 4 March, SJM was back in the black, returning to profitability for the first time since the pandemic. Net gaming revenue reached HK$27 billion (£2.7 billion/€3.18 billion/$3.5 billion), up from HK$20 billion in 2023.
Citywide, SJM controlled 13.1% share of gross gaming revenue, including 15.8% of the mass segment, and 5.1% of VIP GGR.
In comments last week, SJM Chair Daisy Ho hailed the performance of Grand Lisboa Palace, which posted gross revenue of HK$6.58 billion for the year. The resort is “gaining momentum”, she said, “strengthening its market position with an expanding portfolio of non-gaming attractions that cater to a broad spectrum of customers”.
Ho also emphasised the firm’s commitment to “operational efficiencies and … long-term sustainable growth”.
Will that commitment mean the ax for SJM satellites? To date, according to Seaport Research analyst Vitaly Umansky, there has been “no clarity from either the government or from SJM … on the outcome”.
Macau satellite workers will be ‘severely impacted’
Lawmaker José Maria Pereira Coutinho says the government must act now to safeguard the livelihoods of satellite casino workers, most of whom work on the peninsula. He has asked the government to extend unemployment benefits from 90 days to 360 days.
“In these trying times, extending benefits is not just a suggestion,” said Coutinho. “It is a necessity for the people who will be severely impacted.” He also suggested early retirement as an option for some casino workers.
He also recommended career counseling, help with job applications and vocational training for displaced casino employees.
“What will happen to these workers if they are suddenly thrust into roles they are unprepared for?” he asked. “It is the government’s responsibility to ensure their transition is smooth and supportive.”
Coutinho has raised these concerns before. Last October, he urged creation of a solid contingency plan for workers whose jobs hang in the balance.
“We cannot overlook the fact that the closure of these casinos will have a domino effect on the local economy,” he wrote. It will have repercussions “not just (for) the workers but also the small businesses that depend on them.”
Original article: https://igamingbusiness.com/casino/will-macau-concessionaire-sjm-shut-down-satellite-casinos/
