China to Tighten Rules Over Casinos in Macau

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The bill would halve the term of new casino licenses and require operations to comply with China’s national security requirements.

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Ben Lee, managing partner and founder of Macau-based consulting firm IGamiX, ​​said the draft law was more modest than people expected.

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The bill would not reduce the current number of casino licenses, and removed an earlier provision for government representatives at casinos to more closely monitor their operations.

“It’s a positive development in that it gives us a little bit more clarity going forward,” Mr. Lee said.

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US-listed shares of major casino operators trading in Macau jumped in early morning trading on Friday. Las Vegas Sands Corporation

Received over 15%, and Wynn Resorts Ltd.

9% rose. Shares of both companies fell sharply last year, while MGM Resorts International – which has less exposure to Macau – outperformed.

The Chinese gambling enclave has been knocked down by the pandemic as the pandemic largely prevented mainland tourists from visiting the city and wiped out billions of dollars in gambling revenue, a lifeblood of Macau’s economy. The arrest of one of the Macau gambling industry’s highest-flying figures late last year also sent shudders to the sector, particularly the junket operators that served up the many high-rollers.

Under the new draft, Macau will grant a maximum of six casino licenses for a period of 10 years, which can be extended by a further three years in exceptional circumstances. Casino operators currently have three concessions and three sub-concessions lasting 20 years, meaning there could in theory be enough new licenses for all of them. Licenses held by US-owned companies and local rivals expire in June.

The proposal states that the authorities will strengthen surveillance on companies and those involved in gambling.

Casino operations must also be consistent with the national security and security of Macau, the bill said. Last month, Chinese state media reported that Beijing’s top envoy in Macau would be made national security adviser to the local government. Mr. Lee said the clause could expose US operators to an exit from political tensions between the US and China.

To increase the share of local ownership, the government’s draft required that 15% of the casino company’s share capital be held by a director who is a citizen of Macau, up from 10% in the earlier rules. Companies must increase the amount of their capital to the equivalent of $624 million to ensure that they have adequate financial resources.

The authorities also introduced a cap on the public float of shares in the licensee. The head of Macau’s economy and finance secretary’s office, Ku Mei Leng, told a news conference on Friday that if the proportion of listed shares is too large, it could affect the company’s shareholders and the government’s monitoring of finances.

The implications of the new provision were not immediately clear. The aim is to ensure the healthy development of the gambling industry and not limit market freedom, Ms. Koo said.

Write Elaine Yu [email protected] . Feather


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