International edition
August 01, 2021

In an attempt to curb capital outflows to Macau

China: Gambling legalization in Hainan island could harm Macau

China: Gambling legalization in Hainan island could harm Macau
Hainan’s plans also come at a sensitive time as Macau regulators outline the process for the bidding of gaming concessions this year, with operators’ licenses expiring beginning in 2020.
Macau | 02/02/2018

Government agencies are considering allowing online betting and other gambling on the Chinese island of Hainan, and the proposal could open the door to physical casinos south of the former Portuguese colony. Hainan, often referred to as China’s Hawaii for its white sand beaches, could cut tourism flow to Macau, whose gaming revenue bulk comes from Chinese tourists.

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plan to allow online betting and other gambling on the Chinese island of Hainan, which could mean the opening of physical casinos less than 300 miles (480 kilometers) from Macau, could threat the USD 33 billion industry fueling revenue for Las Vegas Sands Corp. and Wynn Resorts Ltd.

Hainan, often referred to as China’s Hawaii for its white sand beaches, could cut tourism flow to Macau, whose gaming revenue bulk comes from Chinese tourists. Out of 3 million visitors in December, more than 2 million were from the mainland. Additionally, this new strategy may mean an overlapping in interests on the customer target of both regions. Macau has been shifting to attract Chinese tourists and families to the territory, and that’s the same target audience in Hainan’s push. Macau’s gambling revenue from casual gamblers accounted for nearly half of December’s total.

Casino operators’ expansion plans for Macau may become more risky if Hainan draws away visitors. Companies are doubling down on investments in Macau, adding hotel suites and junket rooms to bring in more VIP and mass-market business. They are also creating more family friendly attractions to target Chinese recreational gamblers.

Las Vegas Sands has invested over USD 13 billion in Macau since 2002, and plans to spend USD 1.1 billion in a remodel to bring a London-themed resort. MGM Resorts International is expected to open its Cotai property this month. Infrastructure upgrades, such as the Hong Kong-Zhuhai-Macau Bridge, are in the works to allow more traffic and better access from mainland China and Hong Kong.

China has been aiming to stem billion of dollars in outflows for some time now. Last year, regulators required cash machines to be deployed with facial recognition software to limit withdrawals by Chinese cardholders and curb potential money laundering schemes.

Allowing gaming on the mainland would be one way for Chinese authorities to limit capital outflows and ensure gaming revenue benefits the provincial economy on the mainland.

Hainan’s plans also come at a sensitive time as Macau regulators outline the process for the bidding of gaming concessions this year, with operators’ licenses expiring beginning in 2020. The casino industry is also being roiled by the sexual harassment allegations against Steve Wynn, raising concerns that the scandal could taint Macau’s reputation as it pushes for a more family-friendly image. Japan is also ramping up plans to introduce casino resorts, with expectations for doors to swing open sometime after the 2020 Tokyo Olympics. Casinos in the Philippines and Vietnam are also drawing Chinese gamblers.

Yogonet.com
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