Macau Casino Operators Gain on Proposed Law Changes, Seen as a 'Strong Positive Catalyst' for Sector

January 14, 2022 7:47 AM EST
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The Macau government announced today proposed changes to the local casino law that will see the government tighten oversight over the world’s largest casino market.

Among other things, the government is proposing that gaming licenses will be 10 years, down from the 20 years that the current law states. Authorities also said that the new gaming law will not undermine China’s “national security.”

The number of gaming concessions will remain at six but "will not exceed 10 years,” it is also said in the law amendments. These concessions can be extended for further 3 years in exceptional circumstances. The maximum number of licenses will be 6.

Macau is the only city/region in China where gambling is allowed. The government generates around 80% of its revenue from gambling operations with over 80,000 people working in the industry.

UBS analyst Angus Chan has reflected positively on the proposed changes, which are “largely in-line with our expectations.

"The government has also dropped a previous proposal to introduce a government representative into the operators. In terms of dividend distribution, the government has moved away from the previously proposed approval process and to a notification process, which we view as a softer control. With the benign changes and increased regulatory clarity, we view the announcement as a strong positive catalyst for the sector,” Chan said in a client note.

Shares of major casino operators, like Las Vegas Sands (NYSE: LVS), MGM Resorts (NYSE: MGM), Wynn Resorts (NASDAQ: WYNN), are trading sharply higher in pre-open Friday.

By Senad Karaahmetovic | senad@streetinsider.com



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