Macau Regulation Won't Hurt Casinos
(Macau gaming article updated with analyst commentary on Macau.)
NEW YORK (
) -- Nothing is expected to slow Macau's gaming industry down, not even regulation from the government.
Crown |
Macau Chief Executive Fernando Chui said in a news conference on Monday that he will set up a regulatory body to govern the future growth of the gambling industry. He also said that he is considering taking back undeveloped land from casinos if no proper plans are in place to build.
This is a positive for casino companies that already have operations in the Chinese enclave, like
Las Vegas Sands
(LVS) - Get Report
,
MGM Mirage
(MGM) - Get Report
and
Wynn Resorts
(WYNN) - Get Report
, by limiting new competition.
Chui did not specify a cap on table games, slots or the number of casinos he will allow, a fear of many investors heading into his speech.
Macau still plans to raise the gaming age limit to 21 from 17, though no deadline has been set, and Chui stressed the need for diversification.
Macau has been the fastest growing market in the casino industry. In February, gaming revenue in the gambling hub surged 70% to $1.68 billion.
Analysts expect this strong gaming growth will offset any concerns about China tightening credit or its new hands-on approach to gaming.
As a result, Credit Suisse Gabriel Chan upped his rating on
Melco Crown Entertainment
(MPEL)
to outperform from netural and boosted Sands Chinea to neutral from underperform.
"We still believe the government will do little in terms of specific measures to curtail...
it is unlikely we will see dramatic shifts initially," David Bain, analyst at Sterne Agee, wrote in a note.
Shares of casinos with Macau operations are gaining in morning trading. Las Vegas Sands is climbing 3.9% to $19.41, MGM is up 3.8% to $11.81, Wynn is growing 2.1% to $71.96, and Melco is surging 5.2% to $4.70.
But those who have not yet entered the market, could well be left out of the game.
Harrah's Entertainment
, for one, could have some trouble establishing a presence in Macau in light of the current regulatory situation, said Alex Calderone, who provides turnaround and crisis management services for the gaming sector at Conway MacKenzie.
Sands and Wynn have already capitalized on Macau's strength, completing initial public offerings of their assets in the area late last year. MGM is following in their footsteps, with plans to close its IPO by the third quarter this year.
-- Reported by Jeanine Poggi in New York.
Follow TheStreet.com on
and become a fan on
