Gambling News – wincatchers.com http://www.wincatchers.com/ Fri, 21 Jan 2022 11:11:07 +0000 en-US hourly 1 https://wordpress.org/?v=5.7.5 Macau to extend control over casinos https://www.wincatchers.com/2021/10/26/macau-casinos/ Tue, 26 Oct 2021 12:57:07 +0000 https://www.wincatchers.com/?p=7 Many investors were taken aback by Macau’s attempt to expand their power over its gambling hub. This resulted in a massive selling of shares in casino companies. Long-term watchers, on the other hand, saw it as merely the next step in China’s big ambition to overhaul its $24 billion economy. For years, Beijing has been keen on …

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Many investors were taken aback by Macau’s attempt to expand their power over its gambling hub. This resulted in a massive selling of shares in casino companies. Long-term watchers, on the other hand, saw it as merely the next step in China’s big ambition to overhaul its $24 billion economy.

For years, Beijing has been keen on gaining control of the sector.

It has not only benefited the sole Chinese region where casinos are permitted, but has also served as a conduit for cash outflows for the country’s emerging elite. Authorities have tightened their control. Facial-recognition software has been installed in Macau’s ATMs, cash withdrawals restricted, and a digital currency is under discussion to better manage transactions.

Simultaneously, the government has been building the basis for a shift away from Macau’s reliance on gaming. China’s strategy for the Greater Bay Area, which encompasses Hong Kong and portions of southern China, was unveiled in 2019. It envisions the former Portuguese colony transitioning from its decades-long status as a casino Mecca to become a worldwide leisure and tourist powerhouse. Instead of more baccarat tables, they are looking to open sports stadiums, convention facilities, and traditional Chinese medicine parks.

What the government and Beijing want is a lot more non-gaming amenities. 

The boundary will essentially vanish and  Macau will grow considerably larger. Gambling will be simply one aspect of a much larger metropolis.

The announcement of changes to the legislation governing casinos was one of the clearest indications yet that Beijing will not back down.

The proposed reforms are now open for public and industry comment. They come only a week after the Chinese government unveiled a plan to further merge Macau with the Chinese side. According to a master plan released earlier this month by Beijing, the city is being encouraged to build non-gaming industries in a specified area on the nearby island of Hengqin. It is envisioned there will be a focus on high-tech manufacturing, cultural tourism, Chinese medicine, conventions, and sports. Gambling will not be permitted.

Since the proposal, the Bloomberg Intelligence index of Macau’s six casino companies has dropped 26%. This week, the market recovered modestly, with the index rising around 1.7 percent.

Gambling has been allowed in Macau for more than three centuries.

The activity being authorized in 1847 as a method to replenish the colonial authority’s coffers. By the late nineteenth century, gaming taxes had become the government’s primary source of revenue. The business was monopolized for decades by a firm co-founded by late billionaire Stanley Ho. It was then opened up to current participants in 2002. Macau soon overtook Las Vegas. Today gamblers can pose in front of a replica of the Eiffel Tower. Or wander along dummy Venetian canals on the main strip.

However, a significant change is taking place. Despite still employing one-fifth of the city’s workers, the gaming industry’s contribution to Macau’s gross domestic product had decreased to 51 percent before the epidemic. This figure is down from 63 percent in 2013.

The renewal of licenses for the city’s six casino operators is shaping up to be a major litmus test for Beijing’s shift.

The permits are set to expire in less than ten months.

By then the government is expected to have put pressure on the companies, which have seen gaming revenue contribute 85 percent of overall revenue on average over the last three years. This is according to Bloomberg calculations based on company reports, to increase investment in non-gaming sectors.

Casinos have lately increased their efforts to attract more so-called mass market gamblers. These punters may spend more time eating out and shopping than at the casinos. However projects unrelated to the casino industry may be more difficult. Sands China Ltd are Macau’s largest operator by gaming revenue. They have reported that convention events, ferry service, and retail revenues contributed for less than 3% of net revenue in 2019.

In addition, they face tough competition from elsewhere in the region for non-gaming business. Hong Kong is only a boat trip away. It has a well-established convention and exposition sector and organizes significant international events ranging from art festivals to rugby championships. Because of its tax-free status it has experienced a surge in domestic tourism and hopes to create comparable sectors.

The casino law amendments continue a long established crackdown on VIP punters.

Such gamblers drew China’s ire because they were aided by junkets, which occasionally broke Chinese law by marketing gaming on the mainland, coordinating foreign gambling excursions, and offering shadow banking services to high rollers.

The actions substantially reduced what was previously Macau’s lifeblood. Now, Beijing’s broader strategy may have a similar impact on the gambling sector as a whole.

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