Macau Casino Stocks Tumbles as Government Drafts New Gambling Laws
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Unfortunately, the Hong Kong shares recently experienced the lowest fall since early November last year. However, analysts believe that the increasing scrutiny of the Chinese government on Macau casino operators could have driven investors to sell their shares. Besides, concerns over a major Chinese property developer’s debt could also be another reason.
Furthermore, analysts have warned that if the stringent measure applied in the online casino games market is imposed on casino operators in Macau, the stocks could go down further.
No doubt, major casino operators in Macau are counting their losses.
The Macau Casino Stocks and the Biggest Losers
It appears that even the most financially stable operator in Macau is currently walking on one foot. The Macau casino stock fall affected even the biggest operators in the industry. Check out the big losers in the Macau casino stocks below:
Sands China: Shares tumbled 32.5%
Wynn Macau: Lost 29%
MGM China: Their shares fell by 27%
SJM Holding: Shed a whopping 24%
Melco International: Fell by 20%
Galaxy Entertainment: Their shares dropped by 20% too.
Somehow, the US parent companies of the casino operators in Macau were affected by the fall of the price of stocks. For instance, the shares of MGM Resorts fell by 4.6% in the late morning trade. Also, the Las Vegas Sands shares dropped by 3.9%. Meanwhile, Melco and Wynn were not left out, with each share plugging by 12.9% and 8%, respectively. With this impression, the online casino operators may have a second thought about pushing for the legalization of online gambling in Macau. Not to mention, the real money online gambling industry nowadays is the biggest in some countries.
Why Did the Macau Casino Stocks Fall?
The crash of the recent Macau casino stocks has left so many investors in a fix. See what caused the fall of Macau casino stock. Let’s take a look.
Reversal of Gaming Law: The Macau government opened a 45-day public consultation on the need to reverse their gaming law. Also, the reversal is expected to increase the scrutiny of the operators in Macau. Before now, the Chinese government had already imposed strict conditions on most of the country’s biggest tech companies, online education and video gaming operating in Beijing. According to the Chinese authorities, the reason for this is to target social behaviors that are perceived as harmful. Reports also state that a draft version of the new law plans to add Chinese representatives to the board of casinos that operate in Macau.
The Pandemic: No doubt the pandemic crippled the Macau casino industry. Macau casinos incurred many losses in 2020 because of the pandemic, and very few are recovering. The Macau Gaming Inspection and Coordination Bureau report shows that Macau casino operators’ gross gambling revenues have fallen by 80 percent.
Furthermore, it appears that the reversal of the gaming laws in Macau was the major reason for the fall in stock prices, even though the pandemic contributed.
Expert Views on the Reversal of Gaming Law in Macau
Like most aspects of life, there are two sides of the coin regarding the recent Chinese plans to reverse the gaming law in Macau. An analyst known as DS Kim believes that the Chinese government announcement has planted a seed of doubt in the hearts of most investors.
However, other observers seem to disagree with DS Kim. For instance, Desmond Lam said the new law would keep the Macau casino operators more down to earth. Also, Lam believes that the law will align the government and the community’s plans with the Macau government. Lam is an associate professor in gaming management at the University of Macau.
George Choi at Citi seemed to have agreed that the new law could be difficult to swallow initially, but those new laws will help maintain sustainable growth in the long run.
Is It Time to Legalize Online Gambling in Macau?
Obviously, a lot of online casino operators will answer in the affirmative. The government can legalize online gambling in Macau to save the imminent collapse of the Macau land-based casino operators.
Besides, in most countries where online and land-based casinos operate, online gambling provided revenue when the pandemic caused the shutdown of the brick-and-mortar casinos. If the Macau government approves online gambling, that will improve their revenue.
The Future of Casino Operators in Macau
Right now, it is hard to predict what the future holds for Macau casino operators. With some investors already pulling out, it will be difficult to survive since the pandemic is yet to be entirely subdued.
Finally, legalizing online gambling in Macau remains the best way to keep the Macau casino industry afloat.