Citic Lyon: Macau's 11 satellite casinos will shut down by the end of the year, which is negative news for PARADISE ENT (01180).

Citic Securities released a research report, stating that Zhang Yongchun, the Secretary for Administration and Justice of Macau, said yesterday that the SAR government has received official notifications from SJM HOLDINGS (00880)'s subsidiary Macao Entertainment, MELCO INT'L DEV (00200)'s subsidiary Morpheus, and GALAXY ENT (00027) of the approval of the three gaming concession companies. By the end of this year, the government will end the operation of 11 satellite casinos and 3 junket rooms, and has requested proper arrangements for employees affected by the closure of the satellite casinos. Citic Securities described the event as unexpected, including the closure of the Wynn and MGM casinos. At the same time, Macau may acquire the properties of the Sands and the Sands Cotai Central. This is negative news for PARADISE ENT (01180), as their casino management business will cease operations from 2026 onwards. For the gaming industry, the impact is generally neutral, but GALAXY ENT (00027) and Morpheus are expected to see a more rapid increase in table gaming revenue. According to the latest amendment to the Macau Gaming Law (published in the fourth quarter of 2022), from 2026 onwards, satellite casinos must be directly owned by gaming operators or transitioned to a management agreement structure, and no compensation may be paid in the form of "revenue sharing" or "commission".