Clipping Casino Wings!

Reuters has this to report on the casino scene in Macao yesterday.

"The Chinese city of Macau is considering ways to curtail expansion of the world’s fastest-growing major gambling market, sending shares of US casino operators from Las Vegas Sands Corp to Wynn Resorts Ltd sliding yesterday.

The former Portuguese enclave is considering rules, to be drafted in two to three months, that might impose limits on table numbers and raise age limits for casinos, according to a statement posted on the city’s official website.

Wynn, Sands and MGM Mirage have invested billions in the only Chinese city where gambling is legal, hoping to ride double-digit percentage growth in visitors — particularly from mainland China — and gaming revenue.

But state-run Chinese media and grass-roots organizations say breakneck expansion has fostered social ills from corruption to prostitution. Beijing, worried about addiction, periodically tries to limit the flow of its tourists.

In a statement yesterday, Macau Secretary for the Economy and Finance Tam Pak Yuen said six major casino operators — which he did not name — agreed broadly during a meeting that casino expansion should not be limitless.

“The casino operators have agreed that the scale of the industry should be examined,” it read. “The government pledges that we will listen to public and industry feedback before objectively examining the issues,” including table numbers.

That comes as more than a dozen hotel, casino and retail operators build on the Cotai Strip — a 4 sq km swathe of reclaimed land — with most due to open in 2010.

Macau’s six casino operators include Sands and Wynn Resorts, along with home-grown players Galaxy Entertainment Group Ltd and SJM Holdings Ltd The other two are Melco Crown Entertainment Ltd — a joint venture between Melco International Development Ltd and Australia’s Crown Ltd — and a casino jointly operated by MGM Mirage and local businesswoman/tycoon Pansy Ho.

Spokesmen for Las Vegas Sands had no comment on the government’s statement. Wynn declined comment. A spokesman for the Macau government and MGM could not be reached.

Macau’s government has signalled its desire to curb the industry’s explosive growth. In April 2008, it slapped a moratorium on new casino licenses and a building freeze, a move seen as motivated by an increasingly concerned Beijing.

Las Vegas Sands shares slid as much as 8 per cent before ending down 1.8 percent at US$17.72. (RM60.25) Wynn stock lost as much as 5.6 per cent before finishing off 2.9 per cent at US$65.88. MGM closed 1.6 per cent lower at US$12.08.

“The government’s primary concern appears to be distortions in the labour market caused by gaming’s rapid expansion,” said Susquehanna analyst Robert LaFleur. “This report does not appear to present any threat to the current operators.”

US operators have benefited from a surge in visitors to the island, an hour’s ferry ride from China and Hong Kong. Sands’ Macau arm generated US$491 million of revenue in the second quarter — nearly half its total and twice the Vegas figure.

Underscoring investor interest, Wynn Macau enjoyed a strong debut last week on the Hong Kong Stock Exchange via a US$1.63 billion share sale, ending 6 per cent higher. The gain boded well for the Las Vegas Sands’ own proposed listing later this year.

Macau rocketed onto the global gambling stage following reforms that put an end to a monopoly and awarded licenses to many players that boosted competition. The Chinese territory generated HK$105.6 billion (RM45.9 billion) of gross gaming revenue in 2008, more than double the HK$46.7 billion generated by the Las Vegas Strip during the same period.

Among regulations now under discussion, the government is considering raising the entry age for casinos to 21 years old from 18 and dictating that slot machine halls move away from residential areas and into commercial zones.

In the statement, the government also reaffirmed it was requesting that operators hire locals to staff their establishments, which it said the companies agreed to do.

China quietly began easing restrictions on citizens travelling from Guangdong province to Macau earlier this year, top executives told Reuters in September. It had imposed rules last year limiting them to two trips a year, prompted partly by reports of officials frittering away millions of dollars of government funds."

My Take:

I think they would not choke out the golden geese. China policymakers are now pragmatic. If control they must, they will do so. Everything they do will not impact too much on the golden eggs Macao casinos are laying. Period.