(Bloomberg) -- Shares of Macau casino operators declined Monday as the world’s biggest gambling hub seeks to criminalize illegal money-exchange activities, a common way for Chinese players to circumvent the country’s tight capital controls.
A Bloomberg Intelligence gauge of Macau casino stocks sank as much as 3.4% after reports city officials plan to add a provision to a bill on gaming crimes stipulating that those who lend to or exchange money to gamblers without authorization could face up to five years in prison. Galaxy Entertainment Group Ltd. fell as much as 5.7% in Hong Kong, while Sands China Ltd. shed 5.2%.
The plan is the latest in Beijing’s series of moves to clamp down on capital outflow through gambling in Macau. China has toppled the territory’s leading junkets, which brought in high rollers and provided credit for them, before the city introduced laws banning agents from sharing revenue with casino operators or lending money. The crackdown led to the collapse of the local VIP industry that used to contribute half of Macau’s gaming revenue.
While it remains unclear how many gamblers use money exchangers in Macau, the city detained more than 10,000 individuals conducting such businesses last year, reflecting substantial demand for the services. The activities are often linked to underground banking and other crimes including fraud, human trafficking, kidnapping and robbery.
“This negative news could add uncertainties and hurt the already fragile investment sentiment against the Macau gaming sector,” wrote Citigroup Inc. analysts including George Choi in a note. Big gamblers are unlikely to use these small money touts as their main fund facilitator, they added.
The Chinese government and state-owned media have been highlighting authorities’ efforts in cracking down on illegal money-exchange activities and cross-border gambling in recent months, including a series of major arrests. That indicates a renewed push to stop capital flight as the country faces an economic slowdown.
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