Macau's government is due to begin a 45-day public gaming consultation starting Wednesday as it tries to gauge public consensus ahead of a closely watched rebidding of its multibillion-dollar casinos next year.
Lei Wai Nong, secretary for economy and finance in the world's biggest gambling hub, said the government would further promote the "sustained and healthy development" of Macau's gambling industry as there were still some deficiencies in industry supervision.
At a press briefing on Tuesday, Lei detailed nine areas for the consultation, including the number of licenses to be given, increased regulation and protecting employee welfare, as well as introducing government representatives to supervise day-to-day operations at the casinos.
A Chinese special administrative region, Macau has tightened scrutiny of casinos in recent years, with authorities clamping down on illicit capital flows from mainland China and targeting underground lending and illegal cash transfers.
Beijing has also intensified a war on cross-border flows of funds for gambling, affecting the financing channels of Macau's junket operators and their VIP casino customers.
In June this year, Macau more than doubled the number of gaming inspectors and restructured several departments to ramp up supervision.
Macau casino operators Sands China, Wynn Macau, Galaxy Entertainment, SJM Holdings, Melco Entertainment and MGM China are all required to rebid for their casino licenses when they expire in June 2022.
D.S. Kim, an analyst at J.P. Morgan in Hong Kong, said all Macau gaming names were being downgraded from "overweight" to "neutral" or "underweight" following the briefing because of heightened scrutiny of capital management and daily operations ahead of the license renewal.
"We admit it's only a 'directional' signal, while the level of actual regulation/execution still remains a moot point," he said, adding that the announcement would have already planted a seed of doubt in investors' minds.
George Choi, an analyst at Citigroup in Hong Kong, said that while the public consultation document offered limited details, the suggested revisions enhance long-term sustainable growth for the industry, with "positive implications on the six casino operators."
He cautioned, however, that "we will not be surprised if the market focuses only on the potentially negative implications, given the weak investor sentiment."
Shares in U.S. casinos with operations in Macau fell heavily on Tuesday, with Las Vegas Sands and Wynn Resorts down more than 12% on concerns over tighter regulations.
