Increased regulatory oversight by Chinese authorities concerning overseas gaming is “nothing new” and will not deeply impact the local gaming sector, analysts from Morgan Stanley stated in a report.
This month China’s Ministry of Culture and Tourism indicated that it will “blacklist” what it termed a “third batch” of overseas destinations that attract Chinese tourists for gambling activities, while working with several other government departments to “suspend tour groups and arrangement of tourist visas” for outbound travel to these destinations.
With the exact list of counties still undisclosed, analysts have suggested it is primarily targeting emerging Southeast Asian gaming jurisdictions such as the Philippines, Cambodia and Vietnam, or Australia.
‘China first introduced an overseas gambling blacklist in Aug 2020 (which was expanded twice in 2021) and increased penalties for overseas gambling in March. Yet, China resumed IVS visas to Macau in Sept 2020 and Macau is the only place gambling is legal in China. We think this suggests China will continue to allow gambling in Macau despite potential regulatory headwinds,’ the brokerage included in the note.
On the other hand, the brokerage considered that the recent launch of China’s “Common Prosperity” Plan to alleviate poverty and reduce income inequality in-country is not supportive of gaming in Macau
In a speech delivered at the Communist Party’s Central Party School in January Chinese President Xi Jinping reiterated the importance of “common prosperity”, saying it is not only an economic issue but also a major political issue critical to the party’s rule., calling on the government to proactively tackle problems such as income gaps to improve people’s sense of “gain, happiness and security”
In February 2021, the Chinese government also announced the promotion of
“Common Prosperity” will be prioritized with some Chinese social media
platforms tightened controls over users’ display of luxury spending.
‘We believe Base and Middle mass/Slot segment will benefit over VIP/Premium mass since the “Common Prosperity” plan may suggest more wealth redistributive policies in future. Average Daily Theoretical Loss (ADT) for Premium Mass and Middle Mass are roughly >HK$50,000 and HK$8-50,000’, respectively.
VIP results – represented by VIP baccarat – dropped by 6.8 per cent in the second quarter from the previous three months to almost MOP8.5 billion, now representing 33.5 per cent of total gaming make-up.
Meanwhile, casino mass results increased by 16 per cent quarter-to-quarter to some MOP16.8 billion.
Macau’s total visitor arrivals totalled approximately 3,928,000 as of June, up 20.2 per cent year-on-year, with the brokerage underlining it remained optimistic when it comes to the border restrictions being eased and the eventual extension of the current gaming concession licenses in the second half of this year.