Shares in Macau’s casino giants yesterday morning surged after officials announced regulation changes, reducing the uncertainty that has plagued the lucrative sector’s six operators.
The multibillion-dollar industry has been on tenterhooks since officials in September last year announced an overhaul, but new rules unveiled on Friday were less punishing than expected.
Shares in all six casino operators rallied early yesterday in Hong Kong trading, with Sands China Ltd (金沙中國) seeing the greatest gain at almost 13 percent, followed by Wynn Macau Ltd (永利澳門) at 9.6 percent.
MGM China Holdings Ltd (美高梅中國控股) — which operates two massive properties in Macau — saw an 8.1 percent jump, while Galaxy Entertainment Group (銀河娛樂集團) gained 7 percent and Melco Resorts and Entertainment Ltd (新濠博亞娛樂) gained 6.2 percent.
SJM Holdings Ltd (澳門博彩控股) saw the smallest bump, although still substantial, at about 5 percent.
Macau is the only place in China where casino gambling is allowed. Before the COVID-19 pandemic, it raked in more in a single week than Las Vegas makes in a month.
Under a proposed bill unveiled on Friday — all but certain to pass Macau’s legislature — the number of gaming concessions is to remain at six.
However, the length of the concessions — which come up for renewal in June for all six — “will not exceed 10 years,” slashing the previous terms by half. In exceptional situations, concessions can be extended by an additional three years.
It also plans to increase the proportion of local ownership in casino firms from 10 percent to 15 percent.
Under the new rules, the Macau Executive Council on Friday said that gaming must not undermine China’s national security.
Since the industry liberalized in 2002, the sector has exploded into a US$24 billion cash cow, its operations accounting for about 80 percent of government revenue and more than half of GDP.
However, Macau — with its gleaming, palatial fortresses and neon-lit boulevards — was also a playground for wealthy officials and tycoons, allowing them to skirt China’s strict rules on how much cash can be taken out of the country.
Under Chinese President Xi Jinping (習近平), authorities in Macau have cracked down on money laundering, as well as VIP junkets.
Macau authorities have also tried to diversify away from the gaming sector.
Late last year, Alvin Chau (周焯華), CEO of SunCity Group (太陽城集團), Macau’s largest junket operator, was detained for allegedly running illegal betting activities overseas.
The industry has also been hammered by COVID-19, which put a stop to almost all arrivals from mainland China — bringing the territory’s operations to a crawl. Gaming revenue plunged to US$7.5 billion in 2020 as the pandemic struck.
Revenue recovered somewhat last year at US$10.8 billion, but that figure was still down 70 percent from pre-pandemic levels.
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