Macau Casino Operators Set To Face Multiple Challenges In 2022
- Macau casino operators face significant challenges in 2022
- Junket collapse could cost the market over $3 billion
- Change in gaming laws could change Macau gaming landscape
Macau, the biggest gambling hub in the world has dominated the gaming market for well over a decade but that dominance is now under threat. Macau’s gaming market is facing a number of challenges in 2022.
This includes China’s crack down on junket operators and the expiry of gaming licenses this year.
Challenges In 2022
The biggest problem on the horizon for Macau’s gaming operators is the Chinese government. Beijing has made it very clear in 2021 that it is illegal for anyone to encourage or facilitate gambling overseas by Chinese nationals. Initially, many believed that this new rule change would only apply to foreign locations and not to Macau. However, the arrest of Alvin Chau, the head of the biggest junket operator in Macau made it clear that China was also going to target junket operators in Macau.
The junket market in Macau is now nearly non-existent going into 2022 and that is a big blow to casino operators considering that the VIP players that junket operators brought in from China were the source for $3 billion of annual revenue, which is a big cut from potential earnings.
Another big factor that can potentially hurt the market is the renewing of gaming licenses which should take place in the middle of the year. When Macau opened up to foreign investment 20 years ago via its gaming industry, it issued 20 year gaming licenses to six gaming operators. Now the license period has run out and there has to be a decision on what to do about those licenses.
The gaming regulator needs to decide if it is going to issue licenses to all six operators again, downgrade their licenses or open up the market to new gaming operators. Opening up the market to new gaming operators could also eat into the profit of the current set of licensed gaming operators.
Macau’s governing council is in the middle of revising its local gambling laws. The big danger for overseas gaming operators is that the council might require local ownership and even have representatives oversee dividend distribution locally. Top operators like Wynn Macau and Sands China that send back their dividends to the US might be in trouble, if this happens.
The on-going threat of COVID-19 will also continue to pose a challenge in 2022 for Macau’s casinos.