Chinese Government Set To Impose New Regulation On Macau Casinos

The world’s largest gambling market looks like it will be getting a regulatory overhaul as the Chinese government has plans to implement stricter regulations on Macau casinos.

Macau’s secretary for economy and finance Lei Wai Nong announced a 45-day consultation period to implement new rules for casinos in the former Portuguese colony, according to a report from Reuters. The move comes as operators are starting the rebidding process on their licenses, which expire in June 2022.

Lei said that there will be at least nine areas of the casino market with new, stricter rules, including the possibility of changing the number of licenses available. Lei said that an increase in licensees would bring an “unhealthy competition” to the space, making it more likely the number is reduced.

Other new proposals include the length of the license’s validity, more employee protection measures, strengthened verification for junket operators, strengthening official requirements for operators, promoting projects with non-gaming elements, adding a social responsibility requirement, clarifying the criminal liabilities, and having government agents monitor daily operations.

In response to the new proposals, stock prices of gambling companies with Macau properties tanked. Wynn Macau fell 34%, Sands China dropped 28%, Galaxy Entertainment, Melco Entertainment and SJM all saw massive losses for their investors.

“Margins will be crushed at the gambling capital of the world and that will drag down all the big casinos,” Edward Moya, senior market analyst at OANDA told Reuters.

Chinese regulations surrounding the COVID-19 pandemic caused a sharp drop in August’s gross gambling revenue. While these proposed regulations shouldn’t influence Macau’s gross gambling revenue, it could greatly impact investment in the space which could alter the customer’s experience.

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