Wynn Macau said today it is bidding for a decade-long gaming permit in the special administrative region (SAR).
The operator of its namesake integrated resort and Wynn Palace noted in a filing with the Hong Kong Stock Exchange (HKSE) that it expects the new gaming rights would be applicable starting Jan. 1, 2023.
The board of directors of the Company announces that, on 13 September 2022, Wynn Resorts (Macau) S.A., a wholly-owned subsidiary of the Company, submitted a tender to the government of Macau Special Administrative Region of the People’s Republic of China for the awarding of a 10-year gaming concession contract to operate games of chance or other games in casinos in Macau commencing on 1 January 2023,” according to the regulatory document.
Wynn Resorts (Macau) SA, the holding company that controls the two gaming venues, presented a tender offer to the SAR’s government.
Macau Still Crucial for Wynn
The 10-year license Wynn Macau is bidding for in the Chinese territory is in-line with what rivals there are vying for as the SAR’s update gaming laws allow only for decade-long permits.
While that shortens the time of renewal, the good news for Macau concessionaires, including Wynn, is that new gaming regulations there cap the number of casino operators at the current level of six. That means no rivals will be entering the market anew unless they acquire a competitor established there.
In a standard operating environment, the SAR accounts for approximately two-thirds of the US parent’s earnings before interest, taxes, depreciation and amortization (EBITDA).
However, when “normal” returns in Macau is an increasingly murky proposition. While there is now clarity on Macau’s new gaming regulations, and it’s confirmed that no new operators will be entering the market, China’s ongoing zero-tolerance policy on COVID-19 is hindering travel to the casino center.
Currently, Wynn’s Las Vegas operations are thriving and Encore Boston Harbor is smashing records while the company’s Macau casino-resorts lag due to a coronavirus rebound that’s yet to materialize in earnest.
Wynn Supporting Macau Operations
Due to China’s lengthy, punitive COVID-19 policies that restricted travel to Macau, concessionaires are forced to shell out capital to bolster operations there and that includes Wynn.
Regarding access to capital, some market observers believe US-based parent companies may need to funnel cash to Macau units, as Wynn Resorts (NASDAQ: WYNN) and Las Vegas Sands (NYSE: LVS) recently did to bolster their Macau businesses.
In June, the Las Vegas-based parent company extended a $500 million loan to Wynn Macau. According to a regulatory filing with the Hong Kong Stock Exchange, the credit revolver carries a two-year term and an annual interest rate of 4%.
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