Share prices of two Las Vegas-based gaming companies operating in Macau soared on Friday after the government clarified its casino licensing framework following earlier proposals that clouded the region’s outlook.
Las Vegas Sands Corp., which operates one property on the Macau Peninsula and five on the offshore Cotai Strip, saw its shares rise 14.15% to $42.99 per share. Shares of Wynn Resorts, which operates two resorts on the peninsula and one near Cotai, rose 8.60% to $91.47 per share on Friday.
MGM Resorts International saw its stock rise slightly to $44.47 per share, from Thursday’s close of $44.24.
Details of the proposal were unveiled by the Macau government on Friday.
The number of gaming licenses granted by the Macau government under the proposed structure will remain at six, while the term of those licenses will be halved to 10 years. The proposal still needs to be approved by the Macau government.
“After a period of careful consideration that included feedback from dealers and the public, the Macau Executive Council has provided new details on proposed revisions to the Gaming Law. The overall tone and details provided by authorities are very encouraging,” Wynn Resorts said in a statement Friday.
Representatives for MGM and Las Vegas Sands did not respond to requests for comment.
Casino shares for gaming companies operating in Macau fell dramatically in September on fears that Macau’s licensing structure could become much more onerous, with current licenses set to expire in June.
The Macau market is important to the three Las Vegas companies, as large percentages of gross gaming revenues are generated there. Sands, the market leader in Macau, derives around 60% of its revenue there from its casinos and the company is divesting its Las Vegas properties to focus primarily on Macau, Singapore and new domestic markets.
Wynn has less exposure with a smaller market share and more diverse asset set in Las Vegas and Massachusetts. MGM has the smallest exposure to Macau among US companies with its diverse domestic portfolio as well as a partnership in Macau.
Analysts said the new recommendations clarified what was a murky licensing outlook for Macau.
“We believe this is a positive result and significantly reduces Macau license risk and license term risk for Macau operators,” JP Morgan analyst Joseph Greff said in a statement. note to investors Friday morning.
“This (Friday) morning, in what we consider to be a decidedly auspicious event, albeit logically expected, the Executive Council concluded its work and published the key terms of the legal framework of the Gaming Act,” said said New York-based Deutsche Bank. said industry analyst Carlo Santarelli in a note to investors. “As expected, the reworked Gaming Act largely reflects the results of the public consultation in December, which is positive in our view.”
The consultation essentially maintained a status quo position in the allocation of concessions. The new terms of the law did not increase the tax rate, which is currently at a maximum of 39% – a potential area of concern for all dealers in the special administrative region near Hong Kong.
“With three US operators there in Wynn, Sands and MGM, and two of those who have major exposure to this market (Wynn and Sands), further clarifying the future of the market only strengthens their bottom line,” said Brendan said. Bussmann, director of government affairs for Global Market Advisors, based in Las Vegas.
Bussmann said the encouraging things about Friday’s news are that the tax rate will remain the same, the government will continue to work with just six dealers and licensees will know they will have agreements in place for 10 year.
The Review-Journal is owned by the family of Dr. Miriam Adelson, the majority shareholder of Las Vegas Sands Corp.