Macau released a new draft law that would cut the tenure for new casino licenses in half and require operations to align with China’s national security needs, but wouldn’t reduce the number of licenses in the lucrative gambling hub.
Details of the bill were unveiled Friday by Macau’s cabinet and will be submitted to the local legislature for deliberation. The draft followed an earlier set of proposals in September that triggered fears of a crackdown among investors, as Beijing seeks to increase regulatory oversight of what has been a cash cow for Western casino operators.
Ben Lee, managing partner and founder of the Macau-based consulting firm IGamiX, said the draft law was much milder than what people had expected.
The bill wouldn’t reduce the current number of casino licenses, and it dropped an earlier provision to place government representatives in casinos to more closely monitor their operations
“It’s a positive development in that it gives us a little more clarity going forward,” Mr. Lee said.
The U.S.-listed stocks of big casino operators that have businesses in Macau jumped in Friday morning trading. Las Vegas Sands Corp. LVS 13.18% gained more than 15%, and Wynn Resorts Ltd. WYNN 7.09% rose 9%. Shares of both companies had fallen sharply last year, while MGM Resorts International —which has less exposure to Macau—performed better.
The Chinese gambling enclave has been knocked by setbacks 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 shivers through the sector, especially the junket operators that served many high-rollers.
Under the new draft, Macau would grant a maximum of six casino licenses for a period of 10 years, which could be extended by another three years under exceptional circumstances. Casino operators currently hold three concessions and three subconcessions lasting 20 years, meaning in theory there could be enough new licenses for all of them. The licenses, held by U.S.-owned companies and local rivals, expire in June.
The proposal said authorities would strengthen supervision over companies and people involved in gambling.
Casino operations also must be in line with national security and the security of Macau, the bill said. Last month, Chinese state media reported that Beijing’s top envoy in Macau would be made a national security adviser to the local government. The clause could expose American operators to fallout from political tensions between the U.S. and China, Mr. Lee said.
To increase the share of local ownership, the government draft requires that 15% of a casino company’s share capital be held by a director who is a Macau citizen, up from 10% in the earlier rules. Companies must increase their amount of capital to the equivalent of $624 million to ensure they have sufficient financial resources.
Authorities also introduced a cap on the public float of shares in the license holder. Ku Mei Leng, chief of Macau’s Office of the Secretary for Economy and Finance, said in a news conference Friday that if the proportion of listed shares is too large, it could affect the government’s supervision of a company’s shareholders and finances.
The implications of the new provision weren’t immediately clear. The aim is to ensure the healthy development of the gambling industry and not to limit market freedom, Ms. Ku said.
—Dave Sebastian contributed to this article.
Write to Elaine Yu at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
