The government of China has plans to implement stricter regulations on casinos in the region of Macau. This week, the secretary for economy and finance in Macau, Lei Wai Nong announced that a consultation period will begin, consisting of 45 days that will implement the new rules for casinos. The decision comes at the same time as the rebidding process for casino licensing begins, with the licenses set to expire in June of next year.
New Rules Coming
According to Lei, there will be several areas of the casino market that are affected by new rules. The number of licenses available may change, which could signal a decrease in licensing. Lei stated in his comments about the changes that more licenses would create unhealthy competition in Macau, so it is expected that the number of available licenses may be lowered.
Additional changes that may occur include:
- Additional employee protections
- Changes to the length of a license
- Stricter official requirements for operators
- Verification changes for junkets
- Criminal liability clarification
- Government agencies in place to monitor daily gaming operations.
Dealing with Change
As a result of the announcement, the stock prices of companies in Macau dropped significantly. Wynn Macau dropped the most at 34% while Sands China decreased by 28%. All operators saw a decrease due to the potential for a licensing loss in the region.
This hit comes at the same time as Macau is trying to recover from a sharp decrease in gross gaming revenues from August. Regulations connected to the COVID-19 pandemic caused a major strain on the gambling industry last month as travelers from popular regions were not able to come in. A potential outbreak after four people were diagnosed with the virus led to stricter regulations.
For now, it seems major changes are afoot and we could see a much smaller market in the future if regulators decide to cut back on the number of licenses on offer in the area.