Macao Approved the Final Draft of Gaming Law With No Surprises; Liquidity Outlook a Near-Term Focus

Macao’s new gaming law has been approved by the city’s Legislative Assembly, with no major revisions compared with the earlier draft. This provides a basis for the upcoming tender process of new gaming concession, and we expect all six existing casino operators to take part in the fresh tender for a 10-year concession with the possibility of a three-year extension. We think the key negative is the increase in the gaming tax and special levy by 1 percentage point to 40%, but the new law provides casino operators with tax incentives of up to 5% for diversifying their customer base outside of China. The new gaming law framework also highlights a tighter scrutiny on liquidity, with requirement of a minimum capital requirement and net asset value of MOP 5 billion at concessionaires. In addition, the upfront license fee, requirements of non-gaming investment, and minimum gross gaming revenue are also the keys to watch in the upcoming tender documents.