Meta: Macau has finally announced the new gaming laws that will apply to casinos in the province. Find out what restrictions will be in force and how this affects operators.
The former Portuguese territory of Macau is one of the most influential casino hubs in the world. Often dubbed the Las Vegas of Asia, the region has become a prominent gambling destination for players from all over the world.
Macau takes five times as much annually as Las Vegas, making it one of the standout places for casino-lovers everywhere. However, as it now is classified as one of the special administrative regions of China, there has been a gradual tightening of some of the rules. This is because although gambling is legal in Macau, across the bridge in China, it remains prohibited.
Part of the One Country, Two Systems structure, Macau is permitted to have different laws from China but is under increasing influence from the mainland. And it’s this approach that has caused ripples in the casino industry.
Gaming Licences Announcement
In 2020, the Macau Legislative Assembly announced a consultation into casinos and gaming. The results of this have just been announced, with tighter controls over the operations in the province – as expected.
The number of approvals given will be capped to just six operators, and the length of time will be limited to 10 years, compared to the 20-year permits held currently.
In addition, and crucially, there are new limits on junket operators. Until now, a single licence would allow junket operators to run rooms in multiple casinos, but this is being stamped out. Junket operators will still be permitted, but they must only run from a single casino.
The six current casino operators are MGM China, Wynn Macau, Sands China, Galaxy Entertainment, SJM Holdings and Melco Resorts. The licence for all six operators will expire in June, and they have been told that they will need to reapply for their licence.
It’s widely expected that the licences will be renewed, but operators will be told that they must align with the mainland’s directives.
Better News Than Expected
The announcement from Macau was received well by the market, as it provided better news than hoped. Many of the US-based casino stocks were greatly exposed by potential Macau restrictions, so news that they will be able to reapply for their licence sent share prices rising.
MGM was less affected than the other US casino firms because although it has a strong presence, the majority of its revenue comes from operations in the US. The company has had a torrid year after its negotiations to buy the group that owns PartyCasino, Entain, broke down.
Entain and MGM have a joint enterprise in the US, BetMGM. Despite the breakdown of the takeover, BetMGM has performed well, increasing its market share.
Although the news from Macau was more positive than expected, MGM will continue to focus on the US, including BetMGM. With the number of casinos capped in Macau, insiders have been speculating that the revenue achieved up until now may be reviewed as a maximum, with no further expansion welcomed or permitted by Macau or China.
Casino stocks for Macau-based operations may have enjoyed a temporary lift, but questions remain about the long-term viability of investing in a limited China-controlled market.