Macau gaming stocks face another tough year after the industry suffered its first full-year revenue slide amid Beijing’s intensified crackdown on corruption.
This year, Macau gaming plays have lost more than 30 percent, notably Macau Legend Development (01680.HK) and SJM Holdings (00880.HK) which have fallen 65.6 percent and 51.7 percent, respectively.
The city government expects tax income from the gaming sector to hold steady at 115.5 billion patacas (US$14.46 billion) in 2015, implying stagnant gaming revenue.
In 2006, Macau replaced Las Vegas as the world’s largest gaming center, and last year, it reported record revenue of US$45.2 billion, about seven times that of Las Vegas.
However, an anti-corruption drive by Chinese President Xi Jinping is proving to be a game changer.
The campaign, which has prevented senior government officials from visiting Macau, also targets extravagance, dealing a blow to the VIP gaming sector.
High rollers once accounted for 70 percent of total gaming revenue. VIP rooms are widely considered a hotbed for money laundering and corruption.
Meanwhile, Beijing is cracking down on illicit money channeled through Macau casinos.
Earlier this year, gamblers could not get access to their UnionPay credit cards.
Also, the Macau Monetary Authority ordered jewelry stores and pawnshops operating on casino floors to remove their UnionPay card terminals.
The crackdown targeted bogus transactions designed to circumvent China’s exchange controls.
In July, Macau Chinese passport holders with transit visas were limited to a maximum stay of five days from seven.
And in October, a smoking ban at gaming tables squeezed gaming revenue by 8 percent.
Li Fei, deputy secretary general of the National People’s Congress standing committee, warned that the “dominance of the gaming sector is against the overall benefits of local communities in Macau”.
He said the Macau government should seek new growth drivers through cooperation with the mainland.
This article appeared in the Hong Kong Economic Journal on Dec. 31.
Translation by Julie Zhu
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