It may be a sign that the financial world is still some way off ‘business as usual’ that a two year old news story briefly shaved up to eight percent off the share prices of Macau’s Hong Kong-listed gaming operators last week.
Part of the offending narrative was the suggestion from Francis Tam, Macau’s Finance Secretary, that the Macau government planned to raise the minimum age for casino players and dealers from 18 to 21 and planned to locate slot halls away from residential areas. It wasn’t clear from reports whether that meant relocating existing slot venues or just ensuring that new ones weren’t put in suburban districts.
What really put the regulatory cat among the investor pigeons, however, was when Mr Tam went on to say the government is considering a cap on the number of gaming tables and slots in the market and a moratorium on new projects not yet announced or in the active planning stage.
Mr Tam’s statement followed a meeting on Monday with representatives of the recently established Macau casino operators’ trade association. The comments were reported in the Wall Street Journal, sparking a steep (though temporary) fall in local casino stock prices.
Those familiar with the Macau market will recall, however, the ‘new’ initiatives aren’t really new. The age policy and the slot hall initiative were originally proposed in November 2007. The age initiative even reportedly had the blessing of Dr Stanley Ho.
The market capacity cap idea first appeared on the political agenda in April 2008 in response to the then rapidly heating Macau gaming market.
Seasoned Macau watchers will also know that the gap between stated government aims and actual practice can often be quite wide in Macau. This is in marked contrast to Singapore, where what the government says is pretty much what the market gets—and often in short order.
The fact that these policy initiatives have suddenly popped up again so close to the end of the term of office for the current Chief Executive Edmund Ho (his tenure ends in December) strongly hints at two things. The first is that Mr Ho’s successor Fernando Chui will be inclined to adopt the same policies. The second is that the policies have the blessing of the central government in Beijing.
It could alternatively be a shot across the bows of the local casino industry to get its own house in order so that there is no need for actual legislation on the issues. This is a fairly familiar pattern in Mainland China’s administrative system. ‘Police yourselves or else watch out,’ could be the underlying message.
