The trouble plaguing Asia’s casino industry
A plunge in casino-related stocks in Macau has analysts, junket operators and investors reeling.
Nikkei Asia reports that the house doesn’t always win, as Macau is showing.
It bears China’s fingerprints and as part of President Xi Jinping’s crackdown on gambling, the world’s biggest gambling hub is feeling the punch.
Asia’s casino bubble is under stress and strain it has not seen before.
The decision by new Yokohama mayor Takeharu Yamanaki is one example of how the Asian casino bubble has burst and stocks have tumbled.
Yamanaka recently delivered on a campaign promise to withdraw the city’s bid to bring Las Vegas to the Greater Tokyo region.
This, of course, made Yamanaka persona non grata in Liberal Democratic Party circles, which went all-in on casinos.
There are many gripes about gaming.
They include worries about gambling addiction, increased personal bankruptcies and crime.
The specter of the Las Vegasisation of Japan is the best news the loan sharks have had in decades.
Any honest look at Japan’s economy must admit the vital role of pachinko parlours, horse racing tracks, boat racing circuits, cycling stadium, you name it.
Without these betting-business tax revenues, Tokyo’s public debt burden would be much greater.
There are bigger reasons why Yokohama’s anti-casino stance is the right one that other cities and prefectures should emulate.
Japan is late to the party
The Nagasaki, Osaka and Wakayama regions are among the most prominent contenders for casinos.
Operators in the US, Canada and Austria have long salivated at the Japanese market and its bevy of ultra-high-net-worth households.
When late Sands Corp boss Sheldon Adelson visited Japan in 2014, he said that expansion into Japan was “a China play, not a bet on Japan.”
The wager was that the fast exploding ranks of mainland millionaires would flock to Japanese casinos and drop sums of cash.
The trouble is, this is the mode followed in Singapore, South Korea, Malaysia, the Philippines, Vietnam, Cambodia, Saipan, Australia and Russian cities like Vladivostok.
Commodity markets and stocks are the world’s biggest leveraged bet in China’s nouveau riche enriching the globe.
The gaming industry seems a close second.
That is until Asia’s biggest economy stumbles, or Xi’s regulators single you out for erckoking.
Jack Ma’s Ant Group marked the first wave of crackdowns, followed by Didi Global, Tencent Holdings and a fast-growing list of industries.
In a latest round of policies, Xi has hit Macau’s VIP rooms and also is aiming to stamp out cryptocurrencies.
On September 15 alone, Beijing’s actions towards Macau saw casino operators lost as much as a third of their market capitalisation.
Given Xi’s crackdowns, “there is debate over whether China is even investible right now,” a former Las Vegas Sands board member said.
“You never like to see increased regulation, increased taxes, restrained movement.”