Relief in Macau after the announcement of new license conditions

Last Friday, Macaus government announced that there should continue to be six licensed casinos in Macau. As a result, the stock prices of the most important casino groups in the Chinese special administration zone rose rapidly. After a long uncertainty Obviously made this message easier.

Industry unsettled for a long time

After the government in Macau announced that the gambling laws are revised and checked, there was uncertainty in the casino industry. A negative impact on the stock exchange was also visible. In addition, the government’s ambition also unsettled the gaming industry against Junkets in Macau. Now at least the near future of the Casinos be secured.

Extension of the licenses by a total of 13 years possible

The companies currently have a valid license for Macau. The licenses that are now available are limited by June 2023, but are to be extended for 10 years. In 2032, companies can expand them by another 3 years. Previously, the licenses were valid for 20 years after exhibition. In the event of another innovation, the shareholders of the casinos are affected. In the future, managing directors who have been in their place of residence in Macau for at least 15 years should have a share of 15% shares. This raised the minimum rate of 10%. In contrast to gambling tax that is not changed. Thus, the participation remains 40% of gross game turnover.

Since the publication of the new regulations, all six casino companies based in Macau have experienced a rapid price increase on the stock exchange. Among them is Sands China the leader. The company’s share has increased by 4.25 HKD per share since Friday. While the value was still 16.9 HKD per share four days ago, there was already a value of 21.15 HKD per share yesterday. The share rose by around 25%in percentage. In addition, the Sands Las Vegas share also increased by 15%.

Sands China followed by Wynn Macau with an increase of 1.29 HKD per share in the same period. The increase of 6.21 HKD per share to 7.5 HKD was a growth of 20.7 % until Monday morning. Just behind with an increase of 20.4 %, MGM China Holdings is. Also in this period, this share rose by 0.9 HKD per share – from 4.41 HKD to 5.31 HKD per share. This is followed by the other three companies, Melco with an increase of 16.9%, Galaxy Entertainment with 14.2%and ultimately SJM Holdings with 11.06%.

Negative consequences by eliminating the Junkets?

Despite the obvious relief, Ben Lee – Manager of the Macau Consulting company Igamix Management and Consulting – expressed not quite as euphoric compared to the Financial Times: “In the short perspective, the new draft law gives a little clarity. However, this does not necessarily mean that industry will return to its former heyday. One also wonders whether they imply that the gambling income of the past two years is more or less limit of the permitted ”. Experts agree that Macaus’s government of the gambling industry is by no means “granted free rail”.

Particularly lucrative business of the Junkets with VIP customers and high scooters should therefore not be allowed long. The future license conditions prohibit the casino operators cooperation with Junkets. VIP rooms used in this context should also be closed. However, this could also have a negative impact on the business figures. Experts are not yet sure that negative effects cannot rule out the elimination of the Junkets VIP customers. At the moment, however, the still applicable entry due to pandemic is quite heavier. How the casino industry will develop in Macau in the future is currently not really foreseeable.