Shares of Wynn Macau jumped as much as 14% while MGM China, Melco International, SJM Holdings and Sands China rose between 0.9% and 3.1%. Galaxy Entertainment fell by 1.1% when markets opened.
The incumbents were granted initial gaming rights two decades ago and have invested about US$50 billion in the city since then, but a surprise bid from Genting Group’s GMM Limited threatened to unseat one of them. Malaysian tourism and gaming conglomerate Genting lost its bid to win a Macau gaming license.
Analysts pointed to Macau’s strong interest in maintaining stability as its economy reels from the Covid-19 pandemic.
All six operators are swimming in red ink after visitor numbers and gaming revenue plunged in the wake of China’s strict zero-Covid policy.
“It would’ve been too much trouble for the government to deal with the consequences of losing a license holder and gain only a decent operator,” said Alidad Tash, managing director of gaming consultancy 2NT8 Limited.
“It’s not all lost for Genting, however. By going through the selection process, they are actually vetted, and in a position to swoop in for a joint partnership if one of the remaining concessionaires runs out of cash.”
The former Portuguese colony – the only place in China where casinos are legal – has grown into a gambling mecca that generated six times the annual gaming revenue of archrival Las Vegas before the pandemic.
“Visitations in Macau continue to be meaningfully constricted by China’s strict zero-tolerance Covid policies,” James Goldstein and David Bussey, analysts at CreditSights, wrote in a report on Monday. They said recovery in the region was not expected “until China rolls back its zero-tolerance stance, the timing of which remains a major uncertainty”.
All six companies welcomed the decision. “We are honoured to have been selected and granted a provisional award for the concession to operate gaming in Macau,” Lawrence Ho, Melco’s chief executive, said in an emailed statement.
This was the second time that Genting, led by billionaire Lim Kok Thay, has failed to win a Macau gaming license. The conglomerate was seen as a viable contender, given its involvement in industries such as theme parks and cruise ships, observers have said.
China has been pushing for the gaming enclave to diversify its economy by developing non-gaming venues, with casinos previously generating about 80% of the city’s tax receipts.
Operators are also looking to focus on mass-market gaming after Beijing clamped down on the once-thriving junket sector, which relied on high rollers, mostly from mainland China.
Macau’s gaming law was revised this year to encourage casinos to bring in foreign gamblers.
The city shut down for nearly two weeks earlier this year in response to its worst virus outbreak, and MGM’s Cotai casino was locked down with hundreds of people inside last month after a dealer was found to be infected.
Following years of being barred from the city, foreign travellers are now allowed to visit but must undergo a weeklong quarantine.
All of the city’s casino operators reported bleak third-quarter results and have been piling up huge losses, although subsidiaries of larger global gaming companies, such as Wynn and Sands, have been largely shielded thanks to their healthier liquidity.
Fitch Ratings in October said Macau’s gross gaming revenue could take at least two years to recover.