There's too much money at stake for real reform to take place, but the facade of periodic clean ups keeps government ministers happy.
Macau’s government said it will “strengthen” its licensing system for casino junket operators and work with law enforcement to tackle gambling-related crimes.
The government “has continuously adjusted and improved the system, particularly the regulations,” Francis Tam, secretary for economy and finance, said in a statement on a Macau government’s website today, without providing details on any plans.
Macau stocks slumped yesterday after the U.K.’s Times said China plans to crack down on junket operators. Junkets are middlemen who identify high-rollers in China, organize their trips and offer credit, helping to drive the VIP business in the world’s largest gambling hub.
Billionaire Sheldon Adelson’s Sands China Ltd., dropped 2.2 percent percent to HK$35.50 at 1:06 p.m. in Hong Kong trading today, extending yesterday’s 5.2 percent drop. Galaxy Entertainment Group Ltd. lost 2.3 percent today, SJM Holdings Ltd. fell 4.2 percent, MGM China Holdings Ltd. fell 1.5 percent.
Tam has repeatedly said the Macau government will strengthen junket licensing and his latest comments may not signal a tougher stance or added scrutiny, Gabriel Chan, a Hong Kong-based analyst at Credit Suisse said by phone.
“The sell-off is overdone,” said Chan. “I don’t see a junket crackdown looming.”
Casino junkets are required to renew their licenses with the Gaming Inspection and Coordination Bureau every year and they must fulfil the requirements set by the bureau.
The number of licensed VIP gaming promoters rose 7.3 percent to a record of 235 companies and individuals in 2013, according to annual data released by the bureau last month.
The selloff in gaming stocks offers a buying opportunity, Grant Govertsen, a Macau-based analyst at Union Gaming Group said in an interview with Bloomberg Television today.
Editors: Anjali Cordeiro, Aaron Clark. To contact the reporter on this story: Vinicy Chan in Hong Kong at email@example.com. To contact the editor responsible for this story: Anjali Cordeiro at firstname.lastname@example.org.
The Wall Street Journal covered the issue as well in this video broadcast:
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Photo Credit: An employee walks past tables at SJM's flagship casino Grand Lisboa, owned by Macau tycoon Stanley Ho, before the opening ceremony in Macau in this February 11, 2007 file photo. Paul Yeung / Reuters