Wednesday, September 15, 2021

Internet, Education, And Now Casinos... Chinese Pressure Sinks The Gambling Industry In The Stock Market

Technology, education sector and now... casinos. Regulatory pressure from the Chinese government has set its sights on a new sector and its movement has resulted in an unmitigated collapse of the companies that own these gambling establishments on the Hong Kong Stock Exchange, which is dragging the index into negative territory (it is down around 1.5% and is among the worst-hit markets in Asia this morning). 

The fall is especially severe in the case of Sands China, a developer and operator of integrated resorts in Macau and a subsidiary of Las Vegas Sands Corp, owner of The Venetian Las Vegas and The Palazzo. Its shares plunged 29%, while those of Wynn Macau plunged 28% and those of Galaxy Entertainment fell 17.7% on the stock market. The Gaming Inspection and Coordination Bureau of Macau, a semi-autonomous territory in southern China, announced on Tuesday the opening of consultations with society for an amendment to the law regulating gambling in the region, according to local Chinese media. According to a report by Macanese authorities, gambling and related activities accounted for 50.5% of the former Portuguese colony's gross domestic product in 2018.

Despite the Gaming Directorate's acknowledgment in its statement that the sector "has a clear positive driving effect on society and the economy," it also highlights that this activity produces some "social problems" and that regulation "is insufficient." The amendment to the law could limit the licenses for casino operating companies as well as shorten their period of validity.

In addition, the requirements for the approval of new companies will be tightened. According to the amendment, these companies will have to undertake, apart from their main activity, projects not related to gambling as part of their social responsibility. The consultation period for the amendment will last 45 days.

The history of gambling in Macau, known as the "Las Vegas of Asia", dates back to the 16th century, when the city was already a favorite destination for gambling enthusiasts. The Portuguese government of Macau legalized gambling in 1847 and it remained so also from 1999, when Macau returned to Chinese control. The Covid-19 pandemic and the strict restrictions applied at its borders affected the gambling business, causing a 79% drop in casino revenues in 2020.

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