Casino stocks rise following revision announcement

Casino’s shares recorded a surge of up to nearly 17% on Friday after authorities announced amendments to the city’s gaming law.

Reports and analysts had previously forecasted negative sentiments about the casino concession renewals as Beijing tightens scrutiny on the gambling industry. 

Operator Wynn Resorts jumped 8.6%, Las Vegas Sands increased by 14% and Melco Resorts rose nearly 17% higher.

With the lucrative casino licenses up for rebidding, the government aims to raise the general competitiveness of the sector amid Beijing’s broad regulatory crackdown occurring across different sectors, from technology to real estate.
Beijing’s crackdown has already wiped out hundreds of billions of dollars off asset values.

Following the amendment announcement, B. Riley’s gaming stocks analyst David Bain said in a research note on Friday that the bill “helps to remove a substantive overhang” for the six licensed operators, as cited in a report issued by Reuters.

Although Macau’s gaming market still remains volatile due to Covid-19 restrictions and the unwinding of the VIP market, the analysts said, “for those more interested in the long-term mass gaming and overall ‘Macau story,’ today’s announcement should be taken as a welcoming news, in our view.”

Deutsche Bank researchers likewise described the laying of the new framework “a decidedly favorable event.”

Similar sentiments came from analysts at JP Morgan, who stated that the surge of stocks is a “positive outcome and meaningfully reduces Macau license risk and license term risk for Macau operators.”

After several months of waiting, the government finally announced on Friday that the number of new casino operators allowed will remain at six concessions. Their operating period, however, will be halved to 10 years.

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