US Casino Operators Vulnerable in Macau

International gambling consultants have warned that Macau-based casinos owned by US operators could be extremely vulnerable in an all-out China-US trade war. Steve Vickers and Associates issued a report this week, saying that Macau’s gaming sector is “highly exposed”.

“Any significant slowdown or fall in the yuan’s value may lead to Beijing’s further curbing of capital outflows, so dampening casino revenues,” noted the report.

In the report entitled “US-China Trade War: Winners and Losers,” the authors warn that when the current license concessions for the three US majority owned casino operators expire, they could become hostages in the trade war. The report points out that the licenses belonging to Sands China Ltd, Wynn Macau Ltd and MGM China Holdings Ltd are set to expire in 2020 or 2022.

The report goes on to say that “Las Vegas Sands founder Sheldon Adelson boasts close ties to US President Donald Trump.”

These companies now sit on a geopolitical fault line,” it reads. “Their Macau concessions can therefore be on the line.”

Fears are that China could toughen its stance against US owned casinos in the former Portuguese colony-turned Chinese gambling enclave, Macau. While it currently seems to be an unlikely scenario, the Chinese government could essentially refuse outright to renew existing licenses.

US casino operators with business interests in Macau, as such, are being cautioned to assess the political risks posed by nationalistic measures such as boycotts.

“Companies might consider restructuring joint ventures, so as to invest alongside partners deemed ‘neutral’,” it was suggested.

While the analysts say that targeting foreign businesses in order to boycott them for nationalistic motives may prove hard since many are in joint ventures with Chinese partners, it is a possibility and could affect revenues.

Steve Vickers said in a recent interview to GGRAsia that Macau’s membership (in its own right) in the World Trade Organization would not insulate the jurisdiction from a US-China trade war.

“Other than the gaming business, Macau is just too small to be given specific consideration at the strategic level,” he predicted.


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