Stocks in Macau Casinos Tumble as the city proposes a crackdown on the gambling industry.
On Wednesday, Macau casino stocks plummeted after officials announced plans to crack down on the gaming industry in the city known as China’s Las Vegas.
Sands China and Wynn Macau, both listed in Hong Kong, were down more than 24%, while Melco Entertainment, SJM Holdings, MGM China, and Galaxy Entertainment were down between 13% and 17%.
The stock price plummeted after the Macau government announced a 45-day public consultation on ideas to tighten direct oversight of the gambling business, which has been under increased scrutiny in recent years.
The Macau government wants to put its representation on the boards of licensed casino businesses to regulate their operations and make subterranean banking illegal.
The six licenses allowed to run casinos in Macau – the only region in China where gambling is legal – are owned by the corporations that may face tougher restrictions as a result of the plans.
Their licenses will expire in June 2022, and the corporations will have to renew them through a competitive bidding process.
Macau’s economy is virtually exclusively based on gambling, with the city-state bringing in more money in a week than Las Vegas does in a month.
Macau’s casinos provide for roughly 80% of government revenue and over 55% of the city’s GDP as the only place in China where gambling is legal.
By the end of last year, the industry employed over 82,000 individuals, accounting for about 17% of the city’s working population.
While conceding that the gaming sector is the city’s lifeblood, the Macau administration expressed concern about the local economy’s overdependence on it and the resulting inflated living and business costs.