As City Eyes Gambling Review, Billions Have Been Wiped From Macau Casino Stocks.

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As City Eyes Gambling Review, Billions Have Been Wiped From Macau Casino Stocks.

Casino operators in Macau lost billions of dollars on Wednesday as their stocks plummeted after regulators in the world’s most populous gambling city announced measures to tighten their grip on the already troubled industry.

Sands China and Wynn Macau, both listed in Hong Kong, have lost over 30% of their value; SJM Holdings and MGM China have lost 25% of their value; Melco and Galaxy Entertainment have both lost around 20% of their value.

According to Bloomberg News, the cumulative losses for the six major operators totaled $14 billion.

The sell-off occurred after the Macau government launched a 45-day public consultation period that included a proposal for direct oversight of the casino industry, which has been under increased scrutiny in recent years.

Officials want to place government representation on the boards of licensed operators to oversee their activities and make clandestine banking illegal in the business.

The decision comes as mainland China’s government tightens its control on the world’s second largest economy by cracking down on a wide variety of businesses, including tech and private education firms.

President Xi Jinping is also waging a campaign aimed at the country’s super-wealthy, pushing for “shared prosperity.”

“The casino difficulties are a continuation of what has been a fairly large crackdown,” said Jason Ader of SpringOwl Asset Management in New York.

“Right now, there’s a discussion about whether China is really investable. Increased regulation, higher taxation, and restricted movement are all things you don’t want to see. That appears to be the status quo,” said Ader, a former member of the Las Vegas Sands board of directors.

The announcement comes as the six licenses allowing firms to operate casinos in Macau — the only area in China where casino gambling is legal – are set to expire in June, and the corporations will have to compete to keep them.

Macau’s casinos typically provide around 80% of government income and more than half of the city’s GDP, with upwards of 82,000 people employed in the industry by the end of last year, accounting for nearly a fifth of the city’s working population.

It’s possible that the city may earn more in a week than Las Vegas does in a month.

The coronavirus, on the other hand, has wreaked havoc on the industry, with travel restrictions enforced by the government to prevent the sickness from spreading wiping away tourism, which is the casinos’ lifeblood.

For the month of August, gaming income increased by 82 percent. Brief News from Washington Newsday.

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