Shares of Macau casino operators have declined as the city prepares to intensify its crackdown on illegal money changing, targeting Chinese gamblers who circumvent the country’s capital controls.
On Monday, August 12, Galaxy Entertainment Group shares fell 4.4%, reaching a three-year low. Sands China shares dropped nearly 5%, while MGM China Holdings saw a 4.5% decline.
The move follows lawmaker Chan Chak Mo’s announcement on August 9, stating that the assembly committee studying the gambling counter-terrorism bill will introduce a new clause criminalizing illegal money changing within casino premises. This includes all areas related to gambling operations, as well as auxiliary spaces dedicated to arts, culture, leisure, business, or hospitality activities.
Penalties for violating currency conversion rules range from one month to five years, with those convicted facing a ban from casinos for two to 10 years.
Following Citigroup’s 30-day short-term outlook on Macau’s gambling sector, analysts highlighted the potential for short-term share price volatility.
“While most players have legal avenues to defend their actions in Macau, this negative news could heighten uncertainty and further damage the already fragile investment sentiment toward Macau’s gambling sector,” the analysts noted.
This crackdown is part of a broader effort to curb capital outflow from Macau’s gambling industry. Last year, the government enacted a law banning online betting and imposing stricter penalties on illegal gambling operations. Previous measures included dismantling large junket operators that catered to high rollers, which significantly impacted the VIP gaming sector – a key revenue source for Macau.
However, Citigroup pointed out that while concerns over new regulations may be exaggerated, positive indicators remain, such as increased visitor numbers, strong GGR, and higher EBITDA across the industry.
Last week, Wynn Resorts reported a 17% revenue increase at its Macau properties, bringing in $548 million, with Wynn Macau specifically seeing an 11.8% rise in revenue to $337.3 million.
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