International edition
June 12, 2021

Smoking could be completely prohibited by 2016

Operators concerned about Macau smoking ban

(Macau).- The former Portuguese colony could impose a smoking ban. However, the ban, if imposed, would be limited to the mass market area, and not affect the high-roller VIP rooms. Las Vegas Sands, Wynn Resorts and MGM Resorts International, which all have multi-billion-dollar casino resorts in Macau, could be affected by the ban.

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t could also impact Hong Kong-based Melco Crown Entertainment, which competes with the U.S. casinos in Macau and trades on the New York Stock Exchange. Sands and Wynn, which are on the IBD 50 list of top-rated stocks, were both down slightly in Wednesday afternoon trading. Melco Crown also slid a bit, but MGM was up fractionally.

Wells Fargo analyst Cameron McKnight said in a report Wednesday: "Full bans in other markets have immediately impacted revenues by 10%-20% year over year." The Macau Health Bureau isn't planning to go that far yet. But prodded by unions and legislators, it is reportedly planning to implement a partial ban.

Reports from Macau say a proposal from casino operators to ban smoking on the so-called mass market floors has been accepted — those where tourists and middle-class Chinese play poker and other games. The ban wouldn't affect the VIP rooms where affluent gamblers play baccarat.

However, the bureau is also contemplating a complete ban in 2016. "While the timing and probability of a complete ban is unclear, we believe the government will continue to collaborate with the operators, and weigh the timing and implementation of smoking bans with the health of the industry," McKnight said.

Macau, a former Portuguese colony across the strait from Hong Kong, is like Hong Kong, operated by China as a special district, exempt from some Chinese regulations. Wells Fargo has an outperform rating on Sands, Wynn and Melco Crown, and market perform rating on MGM.

Caesars Entertainment, which doesn't have Macau casinos but is the biggest U.S. casino operator, on Monday announced it had received a preliminary license to build a casino in South Korea. It would be Caesars' first foray into the Asian market. The company’s shares fell just under 1% on Wednesday afternoon.

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