US Casino Stocks Plunge as China Tightens Macau Regulations

The Chinese Government announced a 45-day public consultation to increase government oversight in Macau, including appointing state officials to oversee day-to-day running of the casinos. The new regulations wiped $20bn off the market value of affected companies, with significant losses reported by major casino stocks.

Wynn Resorts Ltd. lost 18% of its value over five days, while Las Vegas Sands Corp. saw 9% of its value chopped off. Desmond Lam, associate professor in gaming management at the University of Macau, commented that the new regulations will keep the casinos more down to earth, aligning Macau casino operations more closely to the government’s as well as the community’s concerns.

Louis Lau, a U.S.-based fund manager with Brandes Investment Partners LP, thinks the selloff was an overreaction based on uncertainty and that over the longer term these stocks will likely do well. He noted that the Macau government is still relying on the casinos to provide jobs for the local community and help maintain the city’s status as a leading tourist destination. All casino licenses in Macau will expire in June 2022, adding further uncertainty to the future of the gambling hub.