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Macau

A potential Trump casino in Macau may see ripples reaching even Beijing

Christopher Cottrell says if the Trump brand does enter the fray in Macau, it is likely to further complicate the upcoming negotiations for renewal of the casino licences in the city, and lead to some political repercussions, particularly if Trump runs for re-election in 2020

PUBLISHED : Tuesday, 08 August, 2017, 4:13pm
UPDATED : Tuesday, 08 August, 2017, 4:13pm

It’s official – the Trump brand may have plans for a casino in Macau. In June, a company linked to US President Donald Trump applied for four trademarks under the brand in the special administrative region, including one for casino services.

What will this mean for Macau’s business climate as the gaming concession clock ticks down to 2020, when the first of the licences for the city’s six casino operators start to expire?

The former Portuguese colony had moved to liberalise the casino monopoly following the handover in 1999. After a bidding war in 2001, the government awarded gaming concessions to three operators. But since there are no laws prohibiting the operators from sublicensing their concessions, the three operators soon doubled to six.

Stanley Ho Hung-sun’s Sociedade de Jogos de Macau (SJM) and its sublicensee MGM China will see their concession expire on March 31, 2020, while the other four operators – Galaxy Casino and sublicensee Sands China, and Wynn Macau and sublicensee Melco – will see theirs run out on June 26, 2022.

The next two months will bear watching. News of the trademark application by DTTM Operations LLC, the Delaware-based company responsible for handling the ownership of dozens of trademarks for the US president, was published in Macau’s official records last week. Any challenge to the application must be lodged in the two months after publication, according to the city’s industrial property code.

Will some David challenge Goliath? Let’s remember that the Macau Legislative Assembly election is due in September and that this may become a political football.

Moreover, given that renewal for the gambling concessions is still up in air, the potential entry of the Trump brand adds another element of uncertainty to the industry.

Since two key backers of Trump – Sheldon Adelson and Steve Wynn – both have Macau gaming licences, it is conceivable that either could offer him a deal in their future licensing plans.

That would be highly complicated. As noted, Adelson’s Sands China gets its sublicence from Galaxy. Could any effort to cut a deal with Trump be a sticking point in its future negotiations with Galaxy?

Back in 2001, Galaxy and Sands were the first to win approval from the authorities for a subconcession deal. Sands did not have to pay even one pataca to Galaxy. That’s probably not going to be the case when their deal comes up in 2022.

Following the official nod in 2001, the other two subconcession deals were separately negotiated. Steve Wynn was able to use the Galaxy-Sands structure to charge Melco (owned by Stanley Ho’s son Lawrence) a hefty US$900 million for its subconcession.

Can Adelson promise a deal to Trump yet for a licence that the Galaxy may or may not grant? What about Wynn Macau? Will it cut Lawrence Ho out of a licence?

Trump has put Steve Wynn in charge of the Republican Party’s fundraising efforts for the 2018 mid-term elections. As Macau revs up its campaign against money laundering, will the Trump trademark move spark concerns in America about where the Republicans are getting their funds? It is logical to assume that the Democrats may ask for more transparency into Macau.

As well, how will the greater global media glare affect Macau? The government recently introduced new ATM face recognition cameras to try to stop cashpoint capital flight, and from November 1, stricter rules will be in place to regulate cash passing through Macau customs. Will this increased media attention scare off junkets and hurt Macau gaming stocks?

Meanwhile, the Macau government has not settled the matter of how the SJM-MGM subconcession deal will go forward. Will the structure be scrapped? Will there be a new tender process? How many licences will be granted? After all, how this SJM-MGM deal works out will affect both Sands and Wynn – and perhaps a Trump brand.

The timing of the negotiations for the SJM-MGM concession, which will expire on March 31, 2020, will also coincide with the last stretch of the 2020 US presidential cycle. If Trump is running for re-election, one wonders how that may affect the concession deals and how the Macau government will handle them – and how the Beijing government will react.

Fresh Beijing crackdown on dirty Macau cash anticipated as VIP casino revenues surge

One also wonders whether and to what extent the Trump administration will pursue Macau and North Korea money laundering issues. This was something the Bush administration raised in 2005 when it invoked the Patriot Act and slapped sanctions on the Banco Delta Asia bank in Macau.

How Macau became North Korea’s window to the world... and its nexus for weapons and drugs trafficking

Then again, there aren’t North Koreans in Macau potentially running junkets and laundering money after the assassination of Kim Jong-nam, the estranged half-brother of Kim Jong-un who was killed at Kuala Lumpur airport in February. Or are there? Only recently, a Bloomberg report detailed how a cyberheist of US$81 million from the Bangladesh central bank was linked to North Korea and Macau.

Whatever comes of the Trump trademark application, it is clear the company of America’s first casino president (the Trump conglomerate once operated casinos in Atlantic City) is placing some kind of business bet in Macau.

The questions now are: who is holding what cards and how many chips are on the table? And what will Trump tweet about it?

According to Macau law, mobile phones are forbidden from being used at gambling tables.

Christopher Cottrell has been covering gaming, entertainment and tourism in Macau since 2005. He is an independent editor and senior adviser to CL Consulting in Macau