Macau launches public consultation on gaming ahead of new casino offer
- Government set to tighten regulations, causing Macau stocks to fall
- Consultation to discuss license conditions, government involvement in casino operations
- JP Morgan downgrades Macau casino stocks to underweight, neutral to overweight
HONG KONG, Sept. 15 (Reuters) – The Macau government is due to begin a 45-day public consultation on gambling from Wednesday as it tries to gauge public consensus ahead of a new, closely watched offer from its multi-family casinos. billion dollars next year.
Lei Wai Nong, secretary of economy and finance at the world’s largest gaming hub, said the government will continue to promote the “sustainable and healthy development” of Macau’s gaming industry, as there are still had gaps in supervision of the industry.
At a press briefing on Tuesday, Lei detailed nine areas for consultation, including the number of licenses to be granted, increased regulation and protection of employee welfare, as well as the presentation of government officials to oversee the daily operations of casinos.
Shares of Hong Kong-listed Macau casinos plunged 5 to 15% on Wednesday morning, after heavy overnight drops in US casino shares with Macau operations, investors panicked over potential new regulations.
China’s Special Administrative Region, Macau has significantly stepped up surveillance of casinos in recent years, with authorities cracking down on illicit capital flows from mainland China and targeting clandestine lending and illegal money transfers.
Beijing has also intensified a war on cross-border flows of gambling funds, affecting the funding channels of Macau’s junket operators and their VIP casino customers.
In June of this year, Macau more than doubled the number of game inspectors and restructured several departments to strengthen supervision. Read more
The casino operators of Macao Sands China (1928.HK), Wynn Macau (1128.HK), Galaxy Entertainment (0027.HK), SJM Holdings (0880.HK), Melco Entertainment and MGM China (2282.HK) are all required to re-bid for their casino licenses when they expire in June 2022. There has not yet been clarity on the process from the government on what is required at this time.
DS Kim, an analyst at JP Morgan in Hong Kong, said they were downgrading all Macau game names from overweight to neutral or underweight following the briefing due to an in-depth review of capital management and day-to-day operations prior to license renewal.
“We admit that this is only a ‘directional’ signal, while the level of regulation / enforcement remains a moot point,” he said, adding that the announcement would have already seeded doubt in the minds of investors.
Kim demoted Macau operators Sands, Wynn and Melco to “underweight” from “overweight” and moved Galaxy, SJM and MGM to “neutral”.
George Choi, analyst at Citigroup in Hong Kong, said that although the public consultation document offered limited details, the suggested revisions improve the long-term sustainable growth of the industry with “positive implications for the six casino operators.”
He warned, however, that “we will not be surprised if the market focuses only on the potentially negative implications, given the weakness of investor sentiment.”
The consultation comes as Macau has grappled with a shortage of travelers due to coronavirus restrictions since early 2020. While gaming revenue has increased in recent months, it remains at less than half of monthly trips. 2019.
Reporting by Farah Master; Editing by Michael Perry
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