Macau stocks down 3.7 percent on the news
Speculation is growing that the tropical island of Hainan, which is part of Mainland China, is setting the stage for some form of gaming that could compete with Macau’s multibillion-dollar casino industry.
According to the Straits Times, at least five Chinese-owned resorts are planning to install “entertainment bars,” where players bet real money but are paid in the form of points that can be redeemed at local shops, restaurants and hotels.
The Times went on to report that the resorts owners are looking at baccarat tables and preparing to turn ballrooms into gaming floors.
Hainan, a tropical paradise known as “China’s Hawaii” is located about 1,700 miles (2,700 kilometers) south of Beijing. In recent months, the Chinese government has unveiled parts of a plan to turn Hainan into an international destination by making it the country’s largest free-trade zone and also promoting horse racing and sports lotteries there.
“From our conversations with people on the ground, they are positively excited about the changes that appear to be coming through soon,” said Ben Lee of consultancy IGamiX. Entertainment bars “would undoubtedly draw mainlanders who have never been overseas to try gaming,” he said.
The Macau News Agency reported that the talk of so-called cashless gaming on Hainan has Macau investors edgy. Casino operators in the world’s top gaming town were collectively down 3.7 percent on the Hong Kong Stock Exchange on the news, for a US$4.3 billion (MOP34.76 billion) loss in market capitalization, reported brokerage Union Gaming.
Union Gaming Managing Director Grant Govertsen said there “was clearly an amount of investor panic in regards to the Macau operators.” But the brokerage contends that Hainan currently “represents no threat to Macau from virtually any point of view. As we noted in April, even if true casino gambling was legalized in Hainan, the risk to Macau’s Big 6 is negligible.”
Govertsen reassured investors by saying any cashless games would be low stakes and “for entertainment purposes only.
“We would take this one step further to say that the government of China will be paying close attention and will react quickly (and negatively for the hotel operators) should they begin to press their luck and do anything beyond low-stakes prize-oriented games; anything else would be in contravention of China’s constitution.”
The Investor’s Business Daily reported that China-based stocks are down across the board amid fears of a trade war with the U.S.
