This is the kind of gamble the Macau casinos have never dreamed of.
The gambling capital of the world has recently suffered a $14 billion loss as the Chinese government continues to add pressure to the industry.
Macau's casinos are scheduled for license rebidding next year, and the government proposed to revise the city's gaming law which has caused fear among casino operators.
The Chinese government has been intensifying its pressure on various industries such as technology, education, property, cryptocurrencies and now, the gaming industry.
Premier businesses such as Wynn Macau and Sands China have already experienced heavy losses, a clear indication that no business is being spared by the regulator's crackdown.
MGM China, Melco Entertainment, SJM, and Galaxy Entertainment also have no choice but to bear the big losses that this intensified pressure has caused. Currently, the affected companies had a collective loss of HK$109 billion, which is equivalent to $14 billion.
Lei Wai Nong, Macau's secretary for economy and finance, gave a notice of a 45-day consultation on the gambling industry. The reason for the upcoming consultation, he said, is that the government has noticed critical deficiencies in the industry operation that must be streamlined.
Macau's overreliance on the gambling industry has alerted the Chinese government and is planning to deal with this problem through some changes in the license rebidding process. Casino operators' licensing permit expires in June 2022.
D.S. Kim, an analyst from J.P. Morgan, said that the multinational investment bank is already in the process of downgrading all Macau gaming names from "overweight" to "neutral" or "underweight" because of the Chinese government's current scrutiny on the gambling industry.
"We admit it's only a 'directional' signal, while the level of actual regulation/execution still remains a moot point," Kim said.
Lei has announced the specific areas that the consultation will cover, which are the number of licenses to be given, protecting employee welfare, and increased regulation.
The Chinese government also proposes to increase Macau permanent residents' voting shares in the gaming concessionaires. Regulators also plan to modify the rules regarding the transfer and distribution of profits to casino shareholders.