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Wynn Resorts and Las Vegas Sands witnessed a decline in early trading Tuesday as China continues its crackdown on the gambling Mecca of Macau.
In recent months, Chinese authorities have conducted a series of raids aimed at curbing money laundering in the former Portuguese colony.
From Rueters:
“As Beijing tightens oversight of civil servants and keeps an ever closer watch on flamboyant luxury spending, Macau is an obvious focus. The former Portuguese enclave is the only place in China where citizens can legally bet in casinos. A cash cow for local billionaires and U.S. tycoons such as Wynn and Sheldon Adelson, Macau's annual revenue from gaming is expected to hit $38 billion this year - six times that of Las Vegas.”
Chinese citizens from the mainland are not permitted to transfer more than $50,000 per year outside of the country or to colonies such as Macau and Hong Kong.
Reports suggest that most of the gambling junket operators have ties to the triads, organized crime gangs in China.
Hoffman Ma, deputy chief executive officer of Macau casino, Ponte 16, said: “It's good for the reputation of the industry as a whole. Before, Macau was too reliant on the VIP sector – a relatively small pool of high-rollers involved in massive transactions. It's better to have an industry supported by more mass-market players. I don't think Beijing wants to see an end to funds going from mainland China to Macau. Officials just don't want people to get away with taking too much out by using underground channels.”
Ben Lee, managing partner at Igamix Management, worries about the impact this crackdown will have on the world's largest gambling empire.
“The VIP segment, which traditionally accounts for 70% of Macau's gaming revenue has suffered in terms of growth since June, whereas the mass market has remained strong," he told the Macau Daily Times. "The casinos are experiencing a switch from the VIP to the premium mass…We have been told that the mass market is growing and in particular premium mass.”
- Aaron Goldstein, Gambling911.com
