Certainty around gambling licenses: Macau casino shares rise rapidly
On Friday, the Macau government announced that there will continue to be six casino licensees in the Chinese Special Administrative Region. The news seems to have brought relief among shareholders. Thus, the share prices of the largest casino groups operating in Macau rose rapidly today, reports Reuters, among others.
Macau Casinos Skyline
For months, there has been a great deal of uncertainty regarding the future of Macau's casinos. Announcements by the Macau government to revise gambling laws made a negative impact, especially on the stock market. The Chinese government's simultaneous fight against the junkets also operating in Macau caused further uncertainty in the gaming industry.
However, at least the medium-term future of the casinos now seems secure. There will continue to be six concession holders in Macau. Currently, the gambling groups Sands China, Wynn Macau, MGM China Holdings, Galaxy Entertainment, SJM, and Melco hold licenses for casinos in the gambling metropolis. All six have seen their share prices rise sharply since Friday. At this time, the best casinos in India 2022 was recognized by Deltin Daman and
Deltin Royale.
The current casino licenses all expire in June this year. The new licenses will then be valid for ten years and can be renewed once for three more years. Previously, the licenses had been issued for a term of 20 years. A further innovation concerns the shareholders of the casinos. In the future, at least 15% of the shares are to be held by managing directors who have been residents in Macau for at least 15 years. Previously, the figure was 10%. There will be no change in the gambling tax, however. This is to remain at 40% of gross gaming revenue.
Subsidiaries of US corporations benefit
The Sands China share has experienced the biggest upswing since the innovations were announced. From HKD 16.9 per share on Friday, the stock rose to HKD 21.15 this morning, an increase of about 25%. As recently as Friday, shares of Sands Las Vegas were also up 15%.
Wynn Macau's share price, meanwhile, rose from HKD 6.21 per share at midday Friday to HDK 7.5 at the start of trading this morning (up 20.7%). Shares of MGM China Holdings saw a simultaneous increase from HKD 4.41 to HKD 5.31 per share ( 20.4%).
The other three licensees also saw significant share price increases:
- Galaxy Entertainment: 14.2 %
- SJM Holding: 11.06 %.
- Melco: 16.9 %.
Bad news for junket operators
According to experts, the in part considerable price increases show that relief is spreading among investors. Thus, with the confirmation of the licenses, one of the most important issues for Macau casinos has been clarified for the time being. Ben Lee, the casino expert, and manager of Macau consulting firm IGamiX Management and Consulting, commented to the Financial Times newspaper:
The new draft law provides some clarity in the short term. However, it doesn't necessarily mean the industry will return to its former glory days. One also wonders if it implies that the gambling revenues of the last two years are more or less the limit of what is allowed.
Experts reportedly agree that the Macau government will by no means give the country's gambling industry a free ride. In particular, the junkets' lucrative business with VIP customers and high rollers are to come to an end.
Under future licensing conditions, casino operators will no longer be allowed to cooperate with the junkets. In the same course, the VIP rooms used in this context are also to be closed. According to experts, it is unclear whether the loss of VIP customers gained through junkets could have a negative impact on business figures.
