Focus on Asia: Macau’s seventh heaven

October 4, 2022 10:00 AM
Photo: Shutterstock
  • Ben Blaschke — Managing Editor, IAG
October 4, 2022 10:00 AM
  • Ben Blaschke — Managing Editor, IAG

If nothing else, the revelation that a seventh bidder has entered the race for a Macau gaming concession under the city’s public tender has added a little spice into what most of us expected to be a rather uneventful affair.

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GMM S.A. – an indirect subsidiary of Genting Malaysia – joined the six current concessionaires in submitting its documents on 14 September in a move few saw coming. In doing so, Genting Malaysia said its bid “represents an opportunity for Genting Malaysia to expand its business in the Leisure and Hospitality sector, diversify its geographical footprint and participate in the recovery prospects of the Macau SAR gaming segment.”

It is also, perhaps, an attempt to “right the wrongs” of its last Macau tender back in 2002 when, under the name of Macau Star Ltd, Genting finished sixth of 21 bidders – narrowly missing out to the likes of Wynn, Galaxy and SJM.

As we now know, Macau went on to become the biggest casino hub in the world, generating revenues that at one time dwarfed Las Vegas by a ratio of 7:1.

Those halcyon days are long gone, which is why so many analysts and industry experts – yours truly included – were taken by surprise when the Genting name resurfaced as part of the current re-tender.

So, what are Genting’s chances? Only time will provide an answer to that question, but there are three clear schools of thought on how this might play out. The first is that this is little more than a Hail Mary, with Genting not expecting to win a concession but making sure its hand is in the pie in case one of the current six should fall by the wayside (not an unimaginable scenario given the massive debts most are racking up due to the COVID-19 pandemic).

But there are also some who believe Genting and its patriarch, Chairman and CEO Lim Kok Thay, would not have wasted such time and energy on a bid if it had not already been encouraged to do so by the powers that be in Beijing. It was, some have noted, the Genting Secret Garden Ski Resort in Hubei that hosted the freestyle skiing and snowboarding events at the Olympic Games earlier this year, with which China’s President Xi Jinping is said to have been delighted.

It has also been noted that Genting’s global portfolio of integrated resorts are historically family friendly and include a vast array of non-gaming offerings that appear to align well with the government’s stated tender goals – namely, diversification away from gaming.

Finally, it has been suggested that Genting could ride in as some sort of white knight to save the day for a current concessionaire, most likely SJM Resorts.

SJM’s financial woes have been well documented, even if a recent refinancing of its bank debt has lengthened the company’s liquidity runway considerably (SJM says it can survive another two years of operations under current conditions).

Should the two companies come together, SJM’s expertise in the local gaming space could, in theory, be complemented by Genting’s considerable financial might and strong background in true diversification.

Naturally, I’ll believe it when I see it. But if there is one thing I’ve learnt about this fascinating industry of ours, it’s never say never!