Galaxy Entertainment Closes Two Satellite Casinos

Macau's Galaxy Entertainment has closed two of its satellite casinos, Rio Casino and President Casino, and plans a third closure.

Galaxy Entertainment has closed two satellite casinos and plans closing a third with Macau’s gambling update looming. The new laws place so-called satellite casinos under scrutiny, and many face the chopping block.

Macau’s government has almost finalised a raft of new laws and measures for the gambling haven. There is much focus on satellite casino operators. New rules dictate satellite casinos must be inside properties owned by one of the six concessionaires. There are currently 18 satellite casinos operating in Macau. Some 14 runs under SJM Holdings‘ license, three with Galaxy Entertainment, and one through Melco Resorts and Entertainment.

Satellite casinos can no longer receive a share of any gaming revenue. Instead, they receive income based on the management agreements negotiated with the current six licence holders. This new scheme forced the hands of several satellite casinos, and they folded. However, the closing may prove to be premature because Macau’s government has since said satellite casinos have a three-year grace period before the enforced closures.

Galaxy Entertainment Closes Rio and President Casino

Galaxy Entertainment was not waiting for the three-year grace period to end and acted quickly. It closed Rio Casino and the President Casino, both located in Macau’s downtown area. Signage at both venues greeted patrons last week. The note requested patrons to contact Galaxy to redeem chips or slot machine tickets. In addition, Galaxy promised to reallocate employees from the closed casinos within the Galaxy Entertainment group.

The casino giant plans to run Waldo Casino until December 31, 2022, but its future is hazy. Galaxy is in talks with a partner about the situation, but it does not look good for Waldo Casino.

The satellite casinos do not make much money for their parent company. The 2021 annual report shows an EBITDA contribution of HK$62 million ($11.36 million). Although this is a significant increase from 2020, it is much lower than the HK$117 million ($21.45 million) pre-COVID-19. The three clubs contributed only HK$8 million ($1.47 million) in the current first quarter.

Galaxy denies the closure of Rio is down the upcoming rule changes, in a strange twist to proceedings.

“Galaxy Entertainment Group’s contract with Rio Casino will expire on June 26, 2022. Talks on discontinuing the cooperation between the two parties began several months ago, and the mutual agreement to cease operation of the Rio Casino was not affected by the new arrangements for satellite casinos.”

Flagship Casinos Continue Operating Without a Hitch

Galaxy continues operating its trio of non-satellite casinos without any disruption. StarWorld Macau is the company’s flagship property. Broadway Casino and The Galaxy Macau are also running at 100%.

StarWorld is best known for its high-stakes poker cash games and tournaments. Its poker room opened in 2007 and has since seen some of the biggest names in poker frequent the casino and play for stakes only mere mortals can dream of.

Macau Revenue Still Well Below Standard

Macau’s casinos continue struggling with revenues way below pre-pandemic levels. The Macau Gaming Inspection and Coordination Bureau reported that May’s gross gaming revenue (GGR) was just MOP3.34 billion ($594.4 million). While that figure is a 25% increase on April 2022, it is 87% less than May 2019.

However, there is some light at the end of the tunnel for the struggling Macau casinos. The Chinese Communist Party (CCP) is ending its draconian lockdown rules in Shanghai. No new COVID-19 deaths and fewer new cases mean rules are relaxing. Residents of Shanghai, all 25 million of them, have isolated in their homes except for essential trips. Visiting Macau is not considered essential.

The easing of border restrictions will help Macau’s GGR figures. Negative COVID-19 tests for Macau visitors are extending from 72 hours to seven days. However, they remain at 72 hours for those travelling from Guangdong. The neighbouring province provides more annual visitors than any other Chinese region.