Junket crackdown going in circles

Macau gaming stocks went on a steep downward spiral earlier this week after a media report from the UK – quoting an unnamed law enforcement source – said that a Beijing crackdown on junket operations might take place after Chinese New Year. Beijing has expressed concern about the sheer volume of money being funneled into Macau, against a backdrop of anti-corruption measures in the Mainland, and an emphasis on responsible gaming and governance. The media report claimed that the alleged crackdown would begin only after the upcoming Chinese New Year Golden Week, thus sparing operators and the SAR of any major losses. If the crackdown does occur, the effects are likely to prove marginal, with the possible upside of pruning back less desirable relationships. Regardless of whether the move is symbolic, real, perceived, or otherwise, analysts tell us it is more likely to affect stocks than actual gaming revenue, as it creates an overall buy-in opportunity. In turn the Macau government has vowed to review the junket regulations, enforcement, and licensing process – a long time coming.