I think it really depends. Asia's casino industry has been marked by money laundering and the enabling of capital flight out of China. Crackdowns on the junket operators that have facilitated this activity have really hurt Macau and China-dependent casinos such as Nagacorp. I feel more comfortable with the Philippine casino industry since their government refuses to crack down on the Chinese-owned Philippine Offshore Gaming Operators (POGOs) operating within the country. I own Bloomberry Resorts, and I see opportunities in online gambling companies in the Philippines, too, but otherwise I'm mostly staying away from the sector.
That's right, the licenses have been renewed. So that's a major positive.
On the other hand, the Chinese government has cracked down hard on junket operators. Macau casinos are primarily used for money laundering and capital flight - that's why Baccarat is so popular. So if Chinese VIP customers lose the ability to use junket operators to convert RMB to foreign currency, then casinos will suffer. The mass-market just isn't as profitable.
I'm personally not interested in any of the Macau casinos right now. They've rallied too hard.
Casino stocks down back down to near Covid lows. Do you have a strong view of their share prices at current levels?
I think it really depends. Asia's casino industry has been marked by money laundering and the enabling of capital flight out of China. Crackdowns on the junket operators that have facilitated this activity have really hurt Macau and China-dependent casinos such as Nagacorp. I feel more comfortable with the Philippine casino industry since their government refuses to crack down on the Chinese-owned Philippine Offshore Gaming Operators (POGOs) operating within the country. I own Bloomberry Resorts, and I see opportunities in online gambling companies in the Philippines, too, but otherwise I'm mostly staying away from the sector.
What a great article. Well done on this high level of research.
Thank you!
Hello Michael,
How was the license renew in Macau, all 6 got 10 years right? Any change on your point of view?
Regarding SJM inside buying (your post from october), does it gives you a better signal?
That's right, the licenses have been renewed. So that's a major positive.
On the other hand, the Chinese government has cracked down hard on junket operators. Macau casinos are primarily used for money laundering and capital flight - that's why Baccarat is so popular. So if Chinese VIP customers lose the ability to use junket operators to convert RMB to foreign currency, then casinos will suffer. The mass-market just isn't as profitable.
I'm personally not interested in any of the Macau casinos right now. They've rallied too hard.
Great Article