International edition
June 24, 2021

Rules might impose limits on table numbers and raise age limits

Macau may tighten grip on casinos and shares fall

(Macau).- The Chinese city of Macau is considering ways to curtail expansion of the world's fastest-growing major gambling market, sending shares of US casino operators from Las Vegas Sands Corp to Wynn Resorts Ltd sliding on Monday.

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he former Portuguese enclave is considering rules, to be drafted in two to three months, that might impose limits on table numbers and raise age limits for casinos, according to a statement posted on the city's official website, www.gov.mo.

Wynn, Sands and MGM Mirage have invested billions in the only Chinese city where gambling is legal, hoping to ride double-digit percentage growth in visitors - particularly from mainland China - and gaming revenue. But state-run Chinese media and grass-roots organizations say breakneck expansion has fostered social ills from corruption to prostitution. Beijing, worried about addiction, periodically tries to limit the flow of its tourists.

In a statement on Monday, Macau Secretary for the Economy and Finance Tam Pak Yuen said six major casino operators agreed broadly during a meeting that casino expansion should not be limitless. "The casino operators have agreed that the scale of the industry should be examined," it read. "The government pledges that we will listen to public and industry feedback before objectively examining the issues," including table numbers.

That comes as more than a dozen hotel, casino and retail operators build on the Cotai Strip -- a 4 sq km swathe of reclaimed land - with most due to open in 2010. Macau's six casino operators include Sands and Wynn Resorts, along with home-grown players Galaxy Entertainment Group Ltd and SJM Holdings Ltd. The other two are Melco Crown Entertainment Ltd - a joint venture between Melco International Development Ltd and Australian Crown Ltd - and a casino jointly operated by MGM Mirage and local businesswoman/tycoon Pansy Ho.

According to Secretary Tam after the meeting, the gaming revenue in August, September and the first 10 days of this month was “ideal”, adding that an increase was reported when compared to the same period of 2008. “The gaming revenue for the third quarter of this year saw a double digit or some 10 % of growth in contrast to the same quarter of last year,” he added.

However, the Secretary told the reporters the SAR government will retain the previous speculation of a single-digit negative growth in the overall GDP of 2009. On the other hand, Secretary Tam said consensus was obtained among the six gaming operators regarding the direction of the industry’s future development.

In early this year when Macau started to feel the pain brought by the global economic downturn, some gaming companies introduced temporary cost control plans on their employees. The Secretary said since it “has been felt” that the impact of the financial turmoil on Macau was minimising, and the tourism and entertainment industries saw signs of recovery recently, the gaming operators agreed that it is time to review the cost control plans and may lift the measures before the deadline.

The companies also unanimously promised to give local residents priority for employment over non locals especially when they open new properties in the future, as well as to offer local employees “sufficient opportunities” for promotion, Secretary Tam said.

Billionaire Stephen Wynn, CEO of Wynn Macau, said Macau’s plans to raise the casino age limit to 21 and restrict the number of gambling tables in the city will benefit the industry and are “not a worry at all” for his Wynn Macau Ltd. “A casino is no place for children,” he said in a Bloomberg Television interview from Las Vegas. “Someone should be earning their own living before they think about gambling.”

Macau's government has signaled its desire to curb the industry's explosive growth. In April 2008, it slapped a moratorium on new casino licenses and a building freeze, a move seen as motivated by an increasingly concerned Beijing.

Las Vegas Sands shares slid as much as 8 % before ending down 1.8 % at us$ 17.72. Wynn stock lost as much as 5.6 % before finishing off 2.9 % at us$ 65.88. MGM closed 1.6 % lower at us$ 12.08.

"The government's primary concern appears to be distortions in the labor market caused by gaming's rapid expansion," said Susquehanna analyst Robert LaFleur. "This report does not appear to present any threat to the current operators."

“In the long run, these changes will be positive, as there won’t be too much supply of gaming tables,” said Steven Leung, Hong Kong-based director of institutional sales at brokerage UOB-Kay Hian Ltd. “People are worried about unlimited growth.”

US operators have benefited from a surge in visitors to the island, an hour's ferry ride from China and Hong Kong. Sands' Macau arm generated us$ 491 million of revenue in the second quarter - nearly half its total and twice the Vegas figure.

Underscoring investor interest, Wynn Macau enjoyed a strong debut last week on the Hong Kong Stock Exchange via a us$ 1.63 billion share sale, ending 6 % higher. The gain boded well for the Las Vegas Sands' own proposed listing later this year.

Casino revenue in Macau jumped 53 % in September, Portuguese news agency Lusa said. Visitor arrivals rose 6.4 % in August from a year earlier, the first increase in 2009, according to the city’s government.

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