Shares of casino operators with a major exposure in Macau fell sharply on Tuesday, inclusive Las Vegas Sands (LVS), Wynn Resorts (WYNN) i MGM Resorts (MGM), as China observes tougher regulations.
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The proposed rules provide for the elimination of the current sub-concession system, the appointment of government delegates to oversee gaming operators and the creation of an illegal deposit offense, according to a macaubusiness.com report.
In 2002, Macau granted only three game concessions. One in: SJM Resorts, a subsidiary of SJM Holdings; Wynn Resorts (Macau), a subsidiary of Wynn Resorts; and Galaxy Casino, connected to Galaxy Entertainment Group.
Local authorities eventually allowed each dealership to have a sub-concession. They include MGM China Holdings, Melco Resorts and Entertainment and Sands China.
The current concessions expire in June 2022. They can be extended for up to five years. But industry observers say it is more likely to be extended by three years, as SJM and MGM have already expanded their concessions by two years to match the expiration date of the other four dealers.
Officials have not put forward specific policies to review them. But the number of future game concessions and their duration are at stake. Authorities are also proposing more legal requirements for concessionaire supervision, suitability assessment, criminal liability and workers ’guarantees, among other things.
A public consultation for the new gaming law runs until October 29th.
Gambling accounts for 80% of Macau government revenue and 55.5% of its GDP. Authorities suggest policies to reduce Macau’s economic dependence on gambling. They go a step further by saying that the gaming sector should play a leading role in driving this diversification.
Casino shares
Casino operators with a large presence in Macau have had great success today in the stock market. Shares of Las Vegas Sands fell about 10% to 38.71. LVS shares had rebounded from pandemic lows and tested its 50-day line before news broke on Tuesday and closed stocks, according to analysis by the MarketSmith chart.
Wynn shares fell nearly 11%, to 92.25 and below its 50-day line. Melco Resorts (MLCO) fell 5.9% to 11.95.
In the meantime, MGM Resorts, which has less exposure in Macau, fell 3.9% to 41.41. MGM shares exploded beyond a 43.74 point of purchase of an intraday cup-based handle on September 8th. But shares have fallen more than 6% from this point of purchase.
U.S.-focused gaming companies withdrew modestly.
Caesars Entertainment (CZR) fell 1.2% i Penn National Gaming (PENN) 3.5%. Even online betting specialist DraftKings (DKNG) crawled below 2.3%.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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