GGRAsia – Macau satellites seek leeway for business models, says Ponte 16 boss

Macau satellites seek leeway for business models, says Ponte 16 boss

The Macau government should consider agreeing to a more “reasonable” and flexible revenue model for the city’s satellite casinos than the one currently on offer as part of a planned update to the city’s regulatory system, suggested a patron of one of the properties, the Ponte 16 hotel-casino, in comments to GGRAsia.

Without such a modified approach, it would be difficult to make this segment viable in the future, said Hoffman Ma Ho Man, vice president and executive director of Success Universe Group Ltd. His Hong Kong-listed company is an investor and promoter of – Ponte 16, which relies on gambling rights from local operator SJM Holdings Ltd.

The legal update proposes that entities known as “management companies”, if they operate a particular satellite, can only collect a fixed “management fee” rather than a share of casino revenue.

This approach is “rigid”, Mr Ma noted. There was also, he suggested, a lack of clarity on the definition of “casino income”.

The Ponte 16 boss added that if the calculation of any management fee was “based on the site’s revenue in the pre-Covid 19 trading period – in 2019 – the concessionaire might not find it acceptable”.

He further noted, referring to a three-year grace period offered by the Macau government before any changes occur: “There are questions about when a full boom in mass gambling will return… during the three years, or if he will return at all. So there are a lot of uncertainties. »

The government should consider allowing owners of satellite sites to collect their management fees “in a model similar to what is commonly adopted by property or hotel management companies”, Ma suggested.

He characterized this as a management company being able to charge a performance-based fee based on a venue’s turnover in a given period, in addition to a fixed fee it can charge for site management.

The Macau government has already shown flexibility by signaling that it delete a proposal that the developers of the city’s satellite casinos should tie ownership of their respective gaming halls to one of the next generation of gaming concessions.

A separate consolidated invoice is set to regulate Macau’s junket operators and satellite casinos.

Known as the “Casino Gaming Operating Regime”, it states that a management company can only charge a management fee to its licensing partner. The management company is prohibited from sharing “casino revenue” with the concessionaire, and it is also prohibited from having its management fees calculated as a “commission”.

A Legislative Assembly committee, led by veteran lawmaker Chan Chak Mo, discussed the issue of management fees with the government as part of the review of the new gaming regulatory framework.

Mr Chan had previously told local reporters that the so-called management fee should be a “fixed lump sum”, which could be set between gaming licensees and their partner management companies depending on market conditions and the situation. history of the respective satellite. site performance.

But deciding on a benchmark for the performance history of satellite sites — when trying to calculate those management fees — could be “difficult” in practice, especially in today’s business environment, said Mr. Ma from Ponte 16 at GGRAsia.