Macau casino operator SJM Holdings has announced a renewal of its agreement with L’Arc Entertainment. The deal starts on January 1, 2023, and will run till December 31, 2025.

In a filing with the Hong Kong Stock Exchange on February 28, the operator explained that L’Arc will be providing management services, as well as L’Arc Hotel Macau as a satellite casino. The entertainment company will also see to the day-to-day running of the casino.

Per the terms of the agreement, L’Arc will bear all costs and expenses related to running the casino, while SJM will be responsible for tax payments. In terms of remuneration, L’Arc will be paid a monthly fee by SJM in the form of “fixed percentages” of monthly gross gaming revenue (GGR) from the casino operation.

The agreement further states that payment to L’Arc will be capped per year, increasing each year to cater for expected changes to the Macau economy. For 2023, the annual payment is set at HK$253.1 million (US$32.2m); for 2024, the cap will be set at HK$351.7 million ($44.8m); and in 2025, it will rise to HK$450.1 million ($57.34m).

The filing explained that the caps were set “due to the expected recovery of visitor arrivals and gaming revenue as a result of the loosening COVID-19 pandemic preventive measures and travel restrictions”. The figure for 2023 is much less than what SJM paid L’Arc in 2019.

L’Arc Entertainment is wholly owned by Angela Leong On Kei, the co-chairman and executive director of SJM Holdings. SJM and L’Arc have been enjoying a partnership since 2009, when L’Arc first opened. It is one of the many third-party casinos to which SJM lends its license.

Other satellite operators under SJM include Casino Grandview in Taipa, and the Macau peninsula venues Casino Landmark, Casino Casa Real, Casino Kam Pek Paradise, Casino Fortuna, Casino Emperor Palace, Casino Ponte 16, and Casino Legend Palace.

Due to her interests in both companies, SJM Holdings informed the Exchange that “Ms Leong was absent from the board meeting of the company” while the latest deal with L’Arc Entertainment was under discussion. She also “abstained from voting on the board resolution on approving the renewed L’Arc services agreement”.

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