hina has already been cracking down on the use of UnionPay hand-held card swipers within casino resorts as concerns illegal funds are being taken out of the mainland into Macau.
The Macau Monetary Authority ordered jewelry stores and pawnshops operating on casino floors to remove their UnionPay card terminals by July 1, according to the head of SJM Holdings Ltd. (880), the city’s biggest gambling company. The banking regulator didn’t reply to e-mails or answer calls seeking confirmation.
“It has come to our knowledge that individual shops in the casinos have received such notification from the Macau Monetary Authority,” SJM Chief Executive Officer Ambrose So said in an e-mail responding to Bloomberg News questions. He said the change won’t affect SJM much, because it doesn’t have any on-premises pawnshops, just watch and jewelry stores.
Restrictions on UnionPay use will make getting cash “less convenient” for so-called mass-market gamblers, who made up the majority of Macau’s 29.3 million annual visitors in 2013, as they will have to obtain cash away from casino floors, Macau-based analyst Grant Govertsen at Union Gaming Group, wrote in a note published yesterday. Mainland tourists bypassing currency controls helped fuel a decade-long boom in Macau, the only place in China where casinos are legal, operators and analysts have said.
Macau police arrested 12 people in February and March after an investigation into the use of mobile card-swiping devices from UnionPay, a mainland state-backed payment company. The crackdown was aimed at stopping gamblers from illegally using the devices in casinos to get cash, police said in an e-mailed statement earlier this year.
“Restricting the use of UnionPay cards will tighten VIP liquidity,” Success Universe Group Ltd. (487) Deputy Chairman Hoffman Ma said in an interview. Ma said he had been verbally told about the plan by the regulator. Success Universe, which owns the Macau casino called Ponte 16, closed 3.1 percent lower in Hong Kong trading, extending its decline this year to 33 percent.
The proposed restriction “limits the amount of funds available to VIPs to the preset level of junket credit while cutting off their options to obtain more funds during their trips,” Ma said. Union Gaming cut the Macau gambling industry to hold because it “expects to see a string of negative headlines over the coming months,” said Govertsen, who didn’t give details of expected UnionPay restrictions.
Deutsche Bank AG lowered Macau’s casino revenue growth estimate to 12 percent from 15 percent on VIP risks and downgraded SJM and Wynn Macau to hold from buy, Hong Kong-based analyst Karen Tang wrote in a note published June 9.
Wynn Macau dropped 4.6 percent in Hong Kong trading while MGM China fell 3.6 percent, Sands China declined 2 percent and Galaxy Entertainment Group lost 1.5 percent. Sheldon Adelson’s Las Vegas Sands (LVS), which controls Sands China, fell 2.2 percent to US$ 72.84 in New York trading yesterday while MGM Resorts International (MGM) dropped 2.4 percent. Melco Crown’s American depositary receipts fell 5.7 percent and Wynn Resorts, which gets more than 70 percent of revenue from its Macau unit, fell 2.9 percent.
Galaxy and Melco Crown didn’t reply to phone calls and e-mails seeking comment. MGM China said “there is no UnionPay shop within MGM property.” Wynn Macau doesn’t have any pawnshops at its premises, spokeswoman Katharine Liu said. “Sands China doesn’t see any potential negative impact coming from any regulatory changes regarding UnionPay,” Cetin Tanisman, the company’s senior vice president of gaming operations, said in an e-mail.