Optimism over the future of Macau was deflated substantially last month when the Chinese government backed off its relaxation on travel to the SAR and imposed new and onerous visa restrictions.
Just days after the Macau government announced it was considering raising the gambling age from 18 to 21 and imposing a cap on the number of table games offered across the city, the Beijing government announced it is re-imposing the visa restrictions it set on the province of Guangdong. Residents of Macau’s biggest markets were recently permitted to visit Macau once a month after more than a year of being limited to one visit every two months. The relaxation had spurred gaming revenues to record levels in August and September, reversing an 18-month decline.
But the new restrictions, which rolled back to the once-every-two-months level, should slow the growth of the city, which has seen the debut of several new casinos in 2009, including the massive City of Dreams, owned by Melco Crown Entertainment.
The Guangdong government claimed that the policy had never changed since the restrictions were announced, but it is clear that residents have been able to visit Macau more frequently for the past several months.
Observers said Beijing was once again alarmed by the overheated growth of gaming revenues in Macau over the summer, and that this latest move is yet another attempt to control the growth to avoid perceived “social problems” created by gambling. Several years ago, a handful of government officials in Guangdong were caught embezzling money to gamble in Macau and were punished severely.
“We are getting a U-turn on the visa restriction policy,” Credit Suisse analyst Gabriel Chan told MarketWatch. “It’s a sign that the government
doesn’t like these kinds of growth rates and they are exploring ways to cool down the market.”
Earlier that week, a meeting between Francis Tam, Macau’s secretary for economics and finance, and representatives of the six casino operators in Macau resulted in other possible gaming restrictions.
Tam told the operators the government wants to raise the legal gambling age from 18 to 21, matching most of the other developed gaming jurisdictions in the world. While the change would not impact the large casinos, the companies operating slot parlors are likely to see some impact.
For Wynn Resorts, it’s not an issue, according to the chairman.
“This would have absolutely no effect on us,” said Steve Wynn in an interview with Bloomberg TV. “A casino is no place for children. Someone should be earning their own living before they think about gambling.”
In addition to raising the gambling age, Tam said the SAR is drafting a law prohibiting slot machines from residential areas, which could further impact companies that operate the slot parlors.
Another measure being considered by the government is one that would cap the number of table games in Macau. The restriction would be designed to curb growth and to ensure the residents of Macau have first option at the jobs.
Most analysts see the effort to curb tables as a way to control supply.
Macau gaming stocks fell after the restrictions on ages and tables were announced, but quickly rebounded.
But the re-imposed visa restrictions had a more deflating effect, with stocks dipping again on the revelation.