Chinese controls will not impact on Macau, analysts say

Morgan Stanley says that China’s increased regulatory oversight on overseas gaming will not have a deep impact on Macau’s gaming sector.

Macau.- While China continues its fight against cross-border gambling and increases its regulatory oversight, Morgan Stanley doesn’t expect that to mean anything new for gaming in Macau.

Referring to the restart of applications for the Individual Visit Scheme (IVS) for Macau, analysts said: “We think this suggests China will continue to allow gambling in Macau despite potential regulatory headwinds.”

They added: “We remain constructive in the hope of the border opening and eventual extension of licences, both of which we expect in second-half 2021.”

China also announced a “Common Prosperity” Plan that aims to reduce income inequality in-country. Morgan Stanley said that could benefit the base and middle mass slot segment as it suggests more wealth redistribution policies in the future.

Analysts also said they expect Macau to extend its six existing gaming concessions.

Lawrence Ho, Melco’s chairman and CEO, has also said he expects no surprises regarding Macau’s concession renewal process despite a regulatory crackdown in China.

During the presentation of Melco’s financial results for the second quarter of the year, Ho said he expects an extension of the current gaming concessions despite increasing regulatory controls in China.

He said: “All the concessionaires will be working closely with the government and I do not expect any surprises.”

His statement follows a similar opinion from Sands China CEO Wilfred Wong Ying Wai, who said an extension “is the only alternative at this point.”

According to Wong Ying Wai, as Macau’s legislative elections will be held on September 12, the relevant public consultation and legal amendments to the gaming law will only happen after that, leaving no time to prepare for a retendering in time for when licences expire next year.

He said: “I don’t think the government is in a rush to renew the licences because they want to do things right.”

António Lobo Vilela, an expert on gaming law, has also said that authorities are running out of time to complete a public tender for June 2022.

He said the Macau Government “cannot control the timing of the approval of amendments to Macau Gaming Law, neither can it influence the timetable of discussions held in the newly elected Legislative Assembly.”