VML gaming assets vest to Macau government free of encumbrances

Venetian Macau, S.A. (VML), Venetian Cotai, S.A. (VCL), Oriental Venetian, S.A. (VOL) and Cotai Strip Lot 2 Serviced Apartments (Macau), S.A. (CSL2) each signed vesting deeds on 30 December 2022, under which they confirmed and agreed that the relevant gaming assets would vest to the Macau government free of charge and free of encumbrances once the extended sub-concession term expired¹. On 31 December 2022, casino, gaming and gaming support areas covering about 136,000 square meters, or roughly 4.7 percent of the group's total property area, together with gaming equipment, vested to the Macau government and are now owned by it¹. The net book value of those assets was MOP 6,051,300,000¹.

¹.

On the same day as the vesting, VML signed a handover record granting it the right to operate the gaming assets during the concession period, for an annual return of MOP 750 per square meter in the first three years and MOP 2,500 per square meter in the following seven years¹. In years two and three the MOP 750 rate will be adjusted against Macau's average price index for the previous year, and from years five to ten the MOP 2,500 rate will be adjusted the same way¹. Because VML will continue to operate the gaming assets in the same way as under the previous sub-concession, taking substantially all economic benefits and bearing all risks from their use, and assuming it will win a new concession when the current one expires, VML will continue to recognize the gaming assets as property and equipment and depreciate them over their remaining estimated useful lives¹.

What it means for players

The casino floors, gaming areas and machines at the group's Macau properties are now government-owned, but VML continues to run them under a handover record for the duration of its concession¹. The vesting is an ownership change behind the scenes, not a closure or a change of operator.

The concession terms set a per-square-meter annual return VML pays the government for operating the assets, starting at MOP 750 per square meter and rising to MOP 2,500 per square meter in the later years¹. Those payments are a cost to the operator, not a charge to players.

Macau's six concessions are now held by six concessionaires, ending the three-concessionaire, three-sub-concessionaire structure that had been in place until 31 December 2022¹. Players who want to check which entity holds a license and what it covers can consult the Gambling Regulators and Licenses in Asia guide, and general entry and venue information is in Can I Gamble in Macau?.

What happens next

• All social distancing rules at the group's properties, including requirements to reduce the number of gaming table seats and the number of slot machines switched on compared with pre-COVID-19 levels, were lifted in early January 2023¹.
• The bank guarantees VML provided under the sub-concession, including the MOP 2,310,000,000 guarantee, were released in January 2023¹.
• The group's ferry business between Macau and Hong Kong, suspended in 2022, resumed limited operations on 8 January 2023¹.

The company said the timing and manner of a full return to normal operations at its casinos, restaurants and shopping malls will be assessed gradually according to business volumes¹.