Macau casino stocks declined Wednesday after a junket operator closed VIP rooms in the city. In addition, some analysts of online casinos lowered their revenue estimates and longer-term outlook in Macau.
According to casino reviews, Wynn Macau shares dropped 7.7 percent to decline 19 percent for the week. Galaxy Entertainment Group decreased 3.3 percent. Also, Melco International Development fell 1.4 percent. Lastly, Sands China declined 3.9 percent.
The drops came after Suncity closed VIP rooms in its Macau casinos Wednesday. The casino operator wanted to stop trading in the morning because it said it would make an announcement regarding its VIP operators.
Macau Casino Stocks
Wynn Macau would suffer the most after the cancelation of junket businesses. Most of Wynn’s earnings come from the VIP market. Also, it has a 21 percent share of the Macau VIP market. According to betting odds experts, shares of Wynn Resorts dropped over 50 percent so far in 2021.
Wednesday’s casino market slide extended the broad selloff in Macau casino shares this week. Also, it started after the arrest of Alvin Chau, Suncity’s head. Chinese authorities claimed Chau organized cross-border gambling for Chinese gamblers.
Although gambling is legal in Macau, the Chinese authorities implemented stricter gambling policies. They detained Chau and ten others for questioning. After the arrest, Suncity shares declined 48 percent after trading resumed Tuesday.
The arrest of Chau scared junket operators in Macau. As a result, analysts estimated that the revenue of the VIP sector would contract 30 percent to 50 percent in the following weeks. Also, the VIP sector has been on the decline in recent months. It accounted for less than 40 percent of the total gross gambling revenue of the city in 2019.
The gambling crackdown would also affect casino workers. They could come under investigation for promoting gambling in mainland China.
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