MGM Resorts Not Worried About New Macau Casino Crackdown
China has continued to turn the screws on Macau’s casino industry in recent months. Macau which is the biggest gambling hub in the world is already reeling from the impact of COVID-19 but continues to struggle as the Chinese government has been trying to further tighten controls on gambling.
This is mainly because of Beijing’s need to control how money moves out of its economy, since Macau is a major spot for this sort of movement. MGM Resorts International has a strong presence in Macau through its MGM China subsidiary just like some of the other top casino operators in the world like Las Vegas Sands Corp and Wynn Resorts.
Bill Hornbuckle, CEO for MGM Resorts International, who also heads MGM China is not overtly concerned about China’s crackdown. He said these regulatory changes would not change anything when it comes to overall opportunities and growth in the Macau gaming market.
Bloomberg Markets and Finance
Hornbuckle said that MGM will not overreact no matter how matter what gaming analysts predict about the Macau casino market. Hornbuckle said they will wait until there is real evidence to prove that the crackdown is causing a major shift in the Macau casino market.
Top casino operators like MGM Resorts, Wynn Resorts and Las Vegas Sands Corp. rely heavily on their Macau casino operations as it generates more than 50 percent of their gross gaming revenues (GGR). Bloomberg showed that in 2019, Macau’s six casino operators generated a total of $360 billion which was 6x the amount of revenue that Las Vegas casinos generated in 2019.
These big earnings are the reason why some experts are concerned about the recent moves by the Macau authorities. In Sep, the Secretary for Economy and Finance in Macau announced that the government would be reviewing Macau’s casino operations. This was done to increase government oversight over local gambling habits. This move sent gambling stocks diving, with $18 billion in value lost in a single day.
Hornbuckle is not paying too much attention to this as he labels it a speed bump. He points out that the local Gaming Inspection and Coordination Bureau (DICJ) is already pretty strict as they already has a major presence in the two MGM casinos in Macau, MGM Cotai (pictured) and MGM Macau. Hornbuckle is positive that Chinese authorities will be more realistic about their enforcement efforts and these restrictions will ease up in the months to come.
David is our resident 'down under' contributor, letting us know what is going on in the southern hemisphere, he is also keen blackjack player