(Bloomberg) — Macau plans to give a maximum of six casino licenses for a tenure extending to 13 years and limit the public float of gambling operators as part of much-anticipated legal changes aimed at tightening government oversight on the world’s largest gaming hub.
The Macau administration also wants to increase the proportion of local ownership in casino firms from the current 10% to 15%, according to a government briefing Friday. No other details were given on the plan to cap the proportion of casino operators’ shares that can be publicly traded, a move that adds some uncertainty as it wasn’t included in the government’s original proposal.
The bill will now be sent to the local legislature for approval and is near-guaranteed to pass, given Macau’s lawmakers rarely vote against any government proposals.
The release of the final proposal has brought some clarity around the renewal of gaming licenses, which are due to expire by June, and the business prospects of the six current casino operators. Investor anxiety was swirling for months on the possibility of harsher norms and new players getting to enter the market in 2022, displacing some existing ones.
Most of the details are in line with what analysts expected, although the proposed cap of public float came as a surprise. This has added uncertainty to the city’s casino operators whose stocks have plunged 47% in 2021 amid continuing pandemic woes.
Another Blow
China has a larger plan to transform the $24 billion Macau economy, reduce its reliance on gambling and recast it as a global leisure and tourism hub. The new gaming law proposal comes at the heels of a months-long crackdown by Beijing on Macau’s role in enabling capital outflows by allowing the country’s rising elite to bet in freely convertible Hong Kong dollars.
The enclave’s roughly $3 billion VIP gaming revenue was hit badly after authorities arrested Alvin Chau, chief executive officer of Suncity Group in November and sent shockwaves through an industry that was already under siege from growing government intervention. The company operated Macau’s largest junket business that serviced high rollers and extended credit to them.
Macau’s gaming revenue was merely $7.5 billion in 2020 as the first wave of Covid-19 pummeled the gaming hub. It recovered a bit in 2021 with $10.8 billion in gaming revenue but was still down 70% from its pre-pandemic level as it suffered the double whammy of a regulatory crackdown and a dearth of customers because of China’s strict border curbs.
Several Covid-19 outbreaks forced the Chinese government to temporarily suspend quarantine-free travel between the city and the mainland — its main source of visitors — from late September to mid-October.
(Updates with details throughout.)
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