The shares of casino giants in Macau rose on January 17th after the largest gambling hub on a global scale revealed some changes to its regulations – a move that pretty much reduced the uncertainty looming over the 6 casino companies that currently operate in the special administrative region.
The multi-billion-dollar gambling industry in Macau has fallen in turmoil since September 2021 when local officials unveiled plans for a sector overhaul. However, the new rules for the Chinese territory’s gambling sector were less restrictive than initially expected. For the time being, Macau is the only place in China where casino gambling is legal. Before the outbreak of the novel coronavirus pandemic, the former Portuguese colony was the largest gambling hub in the world, generating more money in one week than Las Vegas casinos accounted for on a monthly basis.
As mentioned above, the shares of the six casino operators in Macau rose in the Stock Exchange of Hong Kong (HKEX), with the biggest share price increase of almost 13% seen by Sands China, followed by a 9.6% increase seen by Wynn Macau. MGM China, which currently operates 2 large properties in the special administrative region, experienced an 8.1% share increase. Galaxy Entertainment’s and Melco International’s share prices rose by 7% and 6.2%, respectively. The smallest increase of about 5% was experienced by SJM Holdings.
Six 10-Year Casino Licenses Will Be Available in Macau under the New Gambling Bill
Under the proposed piece of legislation that was officially announced on January 14th, Macau is to keep the number of available casino operating licenses to 6. However, a change will be brought to the length of the permits, all of which are set to come up for renewal in June 2022. After the proposed bill is signed into law, the length of the casino operating licenses will be 10 years at maximum, with the new measure decreasing the previous terms by half. In exceptional situations only, the competent authorities will be able to extend the permits by 3 more years.
At the time when they revealed the measure, Macau officials also outlined plans to boost the proportion of local ownership in casino operators from the current 10% to 15%. The gaming-related taxes would be kept at about 40% for the time being.
The Executive Council of Macau also shared that gaming must not undermine the national security of China, so the new rules would remain tough. As CasinoGamesPro previously reported, since the gambling industry was liberalized 20 years ago, the sector grew immensely, turning Macau into the largest gambling hub on a global scale, with gambling and gaming operations generating about 80% of the overall revenue and over 50% of the gross domestic product.
Macau has become a desired gambling destination for tycoons and wealthy officials, especially considering the fact it allows them to circumvent some country’s rules. As a result, Chinese President Xi Jinping has started a serious crackdown on money laundering practices, as well as on so-called VIP junket operators that have been operating in Macau in recent years.
The new piece of legislation unveiled by local officials a few days ago has eased investors’ concerns about a stricter approach that could be adopted by the authorities to increase the control held by the Government over the sector. According to analysts’ reports, the planned changes should remove some of the major concerns of investors, including ones associated with Government oversight, dividends, gaming tax and minimum shareholding by permanent residents of Macau. Experts have also warned there may be a significant revaluation of the sector as a result of the proposed bill.