Casino Stocks Crashing as Macau is Reviewing its Gambling Policies
Macau is an autonomous region of China that is known as the biggest gambling hub in the world. In fact, Macau has 41 casinos in a 12.7 sq. mile radius making it a top destination for gamblers. Needless to say, gambling is an important part of its economy. However, the Macau government made an announcement last Tuesday about making a 45-day public consultation which will affect gambling. Therefore, on Wednesday, this led to Casino Stocks Crashing as Macau is Reviewing its Gambling Policies.
While nothing is yet in stone about future gambling policies in Macau, the announcement made gambling investors worry. This is due to the first draft of the Macau gaming laws being tougher on gambling activities in the city.
Furthermore, they are looking to promote projects that do not include any gambling elements. Beijing is also wary of Macau’s reliance on gambling and would like to see some changes. However, they have not yet said how they will judge the license rebidding process.
Casino Stocks Crashing leads to Billion in Losses
According to gambling industry news analysts, several U.S. Casino companies that operate in Macau saw huge losses. For example, Sands China (SCHYF) was down over 32% in Hong Kong, while Wynn Macau (WYNMF) took a 28% plunge. Furthermore, MGM China (MCHVF) fell more than 26% and Galaxy Entertainment Group lost almost 20 percent of its share value.
The last time Macau made a revision to its gaming policies was back in 2001. However, investors are showing concerns as Macau is looking to have stricter laws concerning casinos. Lei Wai Nong, Macao’s economic and financial secretary said they are looking to make changes to the existing gambling laws.
Some of the changes would include limiting the number of gambling license in Macau as well as their duration. In addition, they also want to have a stronger review mechanism of gambling operation for approving casinos and employee welfare. Needless to say, those who have gambling operations or thinking about becoming a bookie did not take the news well.
Since Macau is the gambling capital of the world, this will greatly affect the profit margin for many casinos.