A further squeeze in Macau casino revenue is possible if the local government passes a proposal to boost capital requirements for new gaming promoters.
Macau subsidiaries of Las Vegas-based Wynn Resorts, MGM Resorts and Las Vegas Sands are all expecting to open multibillion-dollar casinos and hotels late this year or early 2017. Each of these projects was conceived during a time when government was much less restrictive than it is now.
Macau’s government is working with new junket operators – companies that bring in high-stakes gamblers and lend them money – on a proposal to tighten operations for new entrants, according to people familiar with the matter. Proposals under consideration include raising capital requirements for new junket operators to $1.3 million and would require at least one Macau resident as a shareholder.
The change could deal another blow to the world’s largest gambling hub, tightening money flows as Macau’s $30 billion casino industry struggles with almost 22 months of slumping revenue. Chinese President Xi Jinping’s anti-graft campaign, as well as heightened scrutiny of junket operators, have sent gambling revenue plunging. Operators such as Sands China Ltd. and Galaxy Entertainment Group Ltd. are now turning to tourists by building new resorts.
Further junket supervision “can be incrementally negative for the sector, which continues to suffer from liquidity constraints, increased oversight, and other well documented operating pressures,” Daiwa Capital Markets analyst Jamie Soo wrote in a report.
Macau’s VIP revenue, as measured by baccarat action was worth $16 billion last year, after plunging by 40 percent from 2014. Still, these high-stakes gamblers remain a critical part of the casino industry, contributing about 55 percent of the city’s 2015 gaming revenue.
Phil Hevener has been writing about the Nevada gaming business for more than 30 years. Email: .