China to tighten rules for US casinos in Macau – Community News
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China to tighten rules for US casinos in Macau

Macau has released a new bill that would halve the duration of new casino licenses and require operations to be in line with China’s national security needs, but not reduce the number of licenses in the lucrative gambling hub.

Details of the bill were unveiled Friday by Macau’s cabinet and will be submitted to the local legislature for deliberation. The draft followed a previous series of proposals in September that raised fears of a crackdown among investors as Beijing looks to increase regulatory oversight over what has been a cash cow for Western casino operators.

Ben Lee, managing partner and founder of Macau-based consultancy IGamiX, ​​said the bill was much more lenient than what people expected.

The bill would not reduce the current number of casino licenses, and it dropped a previous provision to place government representatives in casinos to more closely monitor their activities

“It’s a positive development in that it gives us a little more clarity going forward,” said Mr. Lee.

The US-listed shares of major casino operators that have companies in Macau jumped into trading Friday morning. Las Vegas Sands Corp.

LVS 14.52%

achieved more than 15%, and Wynn Resorts Ltd.

WYNN 8.93%

up 9%. Shares of both companies fell sharply last year, while MGM Resorts International, which has less exposure to Macau, outperformed.

China’s gambling enclave has been hit by setbacks as the pandemic largely prevented mainland tourists from visiting the city and wiped out billions of dollars in gambling revenue, a lifeline of Macau’s economy. The arrest of one of Macau’s top gambling industry figures late last year also sent shivers through the industry, especially among the junket operators that served many high-rollers.

Under the new draft, Macau would grant up to six casino licenses for a period of 10 years, which can be extended for a further three years in exceptional circumstances. Casino operators currently have three concessions and three sub-concessions with 20-year terms meaning there could theoretically be enough new licenses for all of them. The licenses, owned by US companies and local rivals, expire in June.

The proposal stated that the authorities would strengthen supervision of companies and people involved in games of chance.

Casino operations must also be consistent with national security and Macau’s security, the bill said. Last month, Chinese state media reported that Beijing’s top envoy in Macau would be appointed as the local government’s national security adviser. The clause could expose US operators to the fallout from political tensions between the US and China, Lee said.

To increase the share of local ownership, the government draft requires 15% of a casino company’s share capital to be owned by a director who is a Macau citizen, up from 10% in the earlier rules. Companies must increase their capital amount to the equivalent of $624 million to ensure they have adequate financial resources.

The authorities have also introduced a limit on the public trading of shares in the licensee. Ku Mei Leng, head of Macau’s Office of the Secretary for Economy and Finance, said in a news conference Friday that if the share of publicly traded stock is too large, it could affect government oversight of a company’s shareholders and finances.

The implications of the new provision were not immediately apparent. The aim is to ensure the healthy development of the gambling industry and not to limit market freedom, Ms Ku said.

write to Elaine Yu at [email protected]

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