The Macau government has recently announced its decision to terminate the concession contract with the Macau Jockey Club (MJC) effective from April 1, 2024. Chief Executive Ho Iat-seng, through the Official Gazette, has empowered the Secretary for Economy and Finance, Lei Wai Nong, to represent the SAR in negotiations for the cancellation of the existing contract.
Background and Contractual Obligations:
The original contract, signed in 2018, was intended to run for 24 years and six months. However, the termination comes as a result of operational challenges faced by the MJC, including its inability to fulfill certain conditions. These conditions included a mandatory capital injection of MOP$1.5 billion (US$186 million) by December 31, 2023, and the development of diversified non-gaming elements.
Press Conference Highlights:
During a press conference, Secretary for Administration and Justice, Cheong Weng Chon, highlighted that the MJC proposed the termination due to operational difficulties and an inability to meet societal needs. The government, after conducting a thorough study, accepted the Jockey Club’s proposal.
Implications and Future Prospects:
Government officials have clarified that there will be no revival of horse racing activities in Macau, considering the industry’s decline and lack of long-term benefits. The MJC’s concession will result in the venue and facilities being handed over to the government without compensation.
Statistics on Decline:
Cheong emphasized the diminishing appeal of horse racing, with average race day attendance dropping from 701 in 2021 to 492 in 2023. Annual attendance also witnessed a decline from 38,000 in 2020 to only 29,000 in 2023.
Financial Status and Employee Transition:
Despite the termination, DICJ director Adriano Marques Ho assured that the MJC had fulfilled its contractual commitments and had not defaulted on tax and fee payments to the government. The MJC has 254 local employees, and the company has committed to following legal procedures for termination compensation. Shareholders have expressed willingness to absorb staff or provide career referrals.
Horse Transfer and Penalties:
The MJC, currently overseeing 289 horses, must ensure their proper transfer to mainland China by March 31, 2025. The Municipal Affairs Bureau will collaborate with mainland authorities to facilitate the transfer for equestrian purposes or to other regions. Penalties will be imposed if the MJC fails to manage the horse transfer appropriately.
Financial Challenges and Prior Announcements:
In the lead-up to this termination, the MJC had announced plans to reduce prize money by 30% due to below-expectation betting turnover. Last June, the MJC reported accumulated losses of MOP$2.1 billion (US$260 million) through 2022, marking an increase of approximately MOP$200 million (US$25 million) in losses compared to the previous year.
The termination of the Macau Jockey Club’s concession reflects the challenges faced by the horse racing industry in Macau. The government’s decision is rooted in a comprehensive evaluation of the club’s operational difficulties and the declining interest in horse racing. As Macau looks toward the future, it remains committed to addressing the welfare of employees, proper horse transfers, and aligning with economic realities in its strategic decisions for the gaming and entertainment sector.