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China – Relocating satellite casinos into licence holder premises would put 15 per cent of casino workforce at risk

By - 25 March 2022

Paradise Entertainment Chairman Jay Chun has said that Macau’s proposed new laws forcing satellite casinos to relocate within the premises of the licence holder whose permit they operate under ‘will significantly affect the operation of satellite casinos’ putting the jobs of 15 per cent of Macau’s workforce at risk.

Mr Chan said: “The Group, being the service provider of Casino Kam Pek Paradise, shall be affected by the enactment of the Draft Bill. The Group is still waiting for further details of relevant provisions of the Draft Bill to be announced and confirmed and will assess its impact on the Group’s operations.

“That said, it has no doubt that satellite casinos (including Casino Kam Pek Paradise) in Macau have made significant contribution to Macau’s economic development and job creation in the past decades.

“The Group has a good reputation as a casino management service provider focusing on mass market patrons for satellite casinos, and has a strong foothold on this aspect in the gaming industry, which has been demonstrated by the outperformance of Casino Kam Pek Paradise compared to many other satellite casinos.

“The Group has a strong will of continuing to provide efficient casino management services and will stay attentive to the development and identification of cooperation opportunities in order to contribute to the Macau gaming industry within the ambit of the new laws.”

Macau currently has 18 satellite casinos.

Casino Kam Pek Paradise generated HK$761.7m in 2021, representing an increase of 36.8 per cent over that of HK$556.6m for the year ended 31 December 2020. Adjusted EBITDA from the casino under the Group’s management segment for the year ended 31 December 2021 was HK$42.3m, as compared with a loss of HK$60.5m for the year ended 31 December

Revenue from electronic gaming equipment and systems segment amounted to HK$78.4m, representing an increase of 209.9 per cent over that of 2020. Revenue for 2021 comprised mainly revenue derived from the sale of 116 LMG terminals and the provision of upgrading services to 1,607 LMG terminals in Macau, and the sale of 99 slot machines in overseas markets. Adjusted EBITDA from the electronic gaming equipment and systems segment for the year ended 31 December 2021 was a loss of HK$21.2m, as compared with a loss of HK$71.6m for the year ended 31 December 2020.

Mr. Chan added: ” We are particularly pleased to see the encouraging result from the debut of our self-developed slot machines in the North American markets. These slot machines were characterised by popular games which are straight-forward, simple and perfectly suited for high denomination areas with non-progressive, standalone progressive and linked progressive options.

“We are cautiously optimistic about the performance of our LMG machines and expect that they would continue to perform well progressively. During the pandemic, uniquely our LMG machines facilitate the implementation of health or safety issues in casinos such as providing social distancing. The recent winding down of junket operators and their related businesses in Macau have rolled down and channeled the VIP business segment to mass segment significantly on where the Group’s strategic position has long been focusing. In addition, it should not be disputable that the casino operators are encountering grave difficulties on combating with the sharp increase in operating costs. High operating costs in Macau require the casinos to impose high minimum bets, which to some points are out of the reach of the mass market players. The LMG system captures the distinctive ability to improve game efficiency and optimise operations. We therefore expect to see further room for the growth on the LMG machines due to the cost efficiencies in that they reduce labour costs for operators, while still providing the thrill of the live table for the players.”

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