SJM faces rising cost pressures as Macau satellite casinos set to close

Macau gaming concessionaire SJM Holdings is confronting growing operational and financial pressures as it prepares for the closure of nine satellite casinos it licenses in the gambling hub by the end of 2025, following sweeping changes to the city’s gaming legislation.

The closures—mandated under amendments to Macau’s gaming law requiring all casinos to operate from premises owned by their respective concessionaires—affect 11 satellite venues in total. With nine of them under SJM’s licence, analysts say the transition is “much more complex” for SJM than for peers Galaxy Entertainment and Melco Resorts, which each license only one satellite venue.

According to JP Morgan Securities (Asia Pacific), the now-closing satellites accounted for 4% of SJM’s trailing 12-month EBITDA. In contrast, the satellite operations of Galaxy and Melco contributed less than 2% to their respective EBITDA figures.

More significantly, SJM will likely be required to integrate thousands of satellite casino staff into its direct payroll, following government directives that all current employees be retained.

“This could even result in losses from wage burdens unless SJM successfully gains meaningful market share with these additional tables,” JP Morgan said in a research memo.

The company is expected to reallocate tables to its flagship properties—Grand Lisboa and Grand Lisboa Palace—but analysts warn that this may not fully offset the operational impact.

“There is a possibility that more tables could lead to a dilution in table utilisation,” Citigroup said in a separate note.

SJM has stated it is considering acquiring hotels housing the Ponte 16 and Le Royal Arc casinos and converting them into directly-operated properties in compliance with the new law.

Satellite casinos, which operate under concessionaire licences but are run by third parties from independently-owned premises, have long been a unique feature of Macau’s gaming sector. Their operation under the partnership model—where revenue is shared between operators and licensees—was upended by legal reforms effective January 1, 2023. These amendments introduced a three-year grace period for full compliance, ending in December 2025.

The venues affected by the closures include SJM’s Grandview, Legend Palace, Fortuna, Landmark, Ponte 16, Le Royal Arc, Emperor Palace, Kam Pek Paradise, and Casa Real. Galaxy’s Waldo and Melco’s Grand Dragon are also slated to shut down under the same policy.