Macau's casino giants rally after gaming bill revealed

Agence France-Presse

Posted at Jan 17 2022 03:06 PM

People wearing masks walk in front of Casino Lisboa, before its temporary closing, following the coronavirus outbreak in Macau, China February 4, 2020. Tyrone Siu, Reuters/File Photo
People wearing masks walk in front of Casino Lisboa, before its temporary closing, following the coronavirus outbreak in Macau, China February 4, 2020. Tyrone Siu, Reuters/File Photo

HONG KONG - Shares in Macau's casino giants surged Monday morning after the world's biggest gambling hub announced changes to its regulations, reducing the uncertainty that has plagued the lucrative sector's six operators.

The Chinese territory's multibillion-dollar industry has been on tenterhooks ever since officials announced plans to overhaul the sector last September, but new rules unveiled on Friday were less punishing than expected. 

Shares in all six casino operators rallied early Monday in Hong Kong, with Sands China seeing the greatest gain at almost 13 percent, followed by Wynn Macau at 9.6 percent.

MGM China -- which operates two massive properties in Macau -- saw an 8.1 percent jump, while Galaxy Entertainment and Melco International gained 7 percent and 6.2 percent, respectively.

SJM Holdings saw the smallest bump, though still substantial, at about 5 percent.

The former Portuguese colony is the only place in China where casino gambling is allowed. Before the coronavirus pandemic, it raked in more in a single week than Las Vegas makes in a month.

Under a proposed bill unveiled Friday -- all but certain to pass Macau's rubber-stamp legislature -- the number of gaming concessions will remain at six.

But 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 the current 10 percent to 15 percent.

Under the new rules, Macau's Executive Council on Friday also said gaming must not undermine China's national security.

Since the industry liberalized in 2002, the sector has exploded into a $24 billion cash cow, its operations accounting for about 80 percent of government revenue and more than half of gross domestic product. 

But 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, authorities have cracked down on money laundering as well as VIP junkets, and Macau authorities in recent years have tried to diversify away from the gaming sector. 

Late last year Alvin Chau, boss of SunCity, the special administrative region's largest junket operator, was detained for allegedly running illegal betting activities overseas.

The industry has also been hammered by the coronavirus, which put a stop to almost all arrivals from mainland China -- bringing the city's operations to a crawl. 

Gaming revenue plunged to $7.5 billion in 2020 as the pandemic struck.

It recovered a little the following year at $10.8 billion, but that figure was still down 70 percent from pre-pandemic levels.

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