Political risks rise for foreign gaming operators in Macau amid tighter Chinese control, report warns

Political risks are escalating for foreign gaming operators in Macau due to increased regulatory oversight from China, according to a recent report by consulting firm Steve Vickers and Associates (SVA). The appointment of Sam Hou Fai as Macau’s Chief Executive in October 2024 marks a shift toward tighter state control, mirroring Beijing’s push for “common prosperity” and a “dual circulation” economic strategy.

Sam, the first mainland-born individual to lead Macau, is expected to implement policies that reduce the region’s dependence on gaming, Macau’s core industry. The shift is expected to intensify “rising political risks for business in Macau”, as policies will likely focus on foreign casinos and restrict capital flow, Macau Daily Times reported, posing potential challenges for international investors.

In recent years, Beijing has increased regulatory crackdowns on junket operators, illegal currency exchanges, and underground banks, with 11,000 related arrests in Macau in 2023 alone. Analysts suggest these measures aim to stem the flow of capital out of mainland China through Macau’s casinos, a move that could reshape the region’s gaming industry and investor expectations.

“Macau’s policy shift presents both challenges and opportunities, impacting growth prospects for foreign investors while aligning Macau more closely with China’s broader economic policies,” according to the report.

The new regulations are also expected to require casino operators to diversify, shifting investment into non-gaming sectors such as tourism, entertainment, and conferences. These requirements support Beijing’s goal of economic diversification and reduced reliance on gambling in Macau.

As regulatory pressures mount, SVA advises foreign investors with interests in China, Hong Kong, and Macau to reassess their strategies to manage risk and adapt to the evolving landscape.

The election of Sam Hou Fai, a former judge and member of the “Thirteen Taibao,” reflects “a growing emphasis on tighter state control and reduced flexibility for business in China as a whole,” according to SVA.