Authorities in Macau are clamping down on illegal money-exchange activities at the region’s casinos to prevent the capital outflow of money from China, and the unlawful exchange of money to gamblers without government authorization.
China has strict capital controls, which prevents mainland residents from entering Macau with more than $5K in foreign currency. The money-exchanges enable gamblers to bypass China’s restrictions on foreign currency, limits on bringing cash in and out of the country, and limits on bank card withdrawals outside of mainland China.
Shares of Macau gambling stocks are trading lower, as the restrictions will likely limit the capital available to tens of thousands of gamblers each year. Melco Entertainment (NASDAQ:MLCO), Wynn Macau, MGM China Holdings, and Galaxy Entertainment Group (OTCPK:GXYYY) are all down 3%-4% on the news.
Recent efforts to crack down on illegal money exchanges were amplified after a money exchange gang member was murdered and robbed of HK$2.5M in a hotel room at a Wynn Macau hotel room.
A new article was subsequently added to the Illegal Gaming Offenses bill that would prohibit anyone from carrying on the business of exchanging loans and coins for the purpose of gambling without authorization in accordance with the law. Anyone found breaking the law would face a maximum prison sentence of 5 years. The law also applies to hotels, entertainment complexes or other commercial facilities, in addition to casinos.
