Earlier this month Las Vegas Sands Corp. (NYSE: LVS) withdrew its appeal of a decision by the Chinese government that denied the company a permit to construct a new casino on property it had leased on the former Portuguese colony of Macau. The Sands’ Chinese subsidiary had spent $10.5 million through the end of December on construction based on a verbal agreement.
At the time there were concerns that China would restrict visas to its citizens who wanted to visit the island, and those concerns were heightened yesterday following a report from Wells Fargo Securities that visa restrictions could be further tightened. Shares of the Chinese subsidiaries of Las Vegas Sands, Wynn Resorts Ltd. (NASDAQ: WYNN), Melco Crown Entertainment Ltd. (NASDAQ: MPEL), and MGM Resorts Inc. (NYSE: MGM) fell in Hong Kong by as much as -6% on the news.
In addition to the visa restrictions, the Chinese government has also lowered spending limits certain credit cards that could further restrict the amount gamblers could spend on the island.
According to a report at MarketWatch, about 41% of mainland visitors to Macau and 25% of all visitors currently travel to the island on the threatened visas. The Wells Fargo analyst noted that slowing growth and increased revenue risk are the order of the day for Macau casinos this year.
Of the casino stocks, only Las Vegas Sands is trading down in the pre-market this morning. Wynn shares are inactive, while Melco and MGM are both up slightly. Talk about gambling.
Paul Ausick
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